Napa Sanitation District

Transcription

1 Fiscal 2014/2015 Operating and Capital Budget Napa Sanitation District Napa, California Clean Water. Healthy Communities.

2 Napa Sanitation District Budget Acknowledgements Board of Directors Jill Techel, Chair Mark Luce, Vice-Chair Peter Mott, Director Charles Gravett, III, Director Charles Shinnamon, Director Keith Caldwell, Alternate Director Alfredo Pedroza, Alternate Director Executive Team Tim Healy, General Manager/District Engineer Jeff Tucker, Director of Administrative Services/Chief Financial Officer Cheryl Schuh, Clerk to the Board/Human Resources Officer Management Team Wastewater Treatment Plant James Keller, Wastewater Treatment Plant Manager Frank Ziliotto, Operations Supervisor Mark Egan, Plant Maintenance Supervisor Mark Koekemoer, Laboratory Supervisor Collections System Todd Herrick, Collection System Manager Nick Becker, Collection System Supervisor Water & Biosolids Reclamation David Martin, Reclamation Systems Director Engineering Services Andrew Damron, Capital Program Manager Administrative Services Cyndi Bolden, Senior Accountant 2

3 Table of Contents Transmittal Letter...5 Budget Resolution...14 District Overview...15 Mission History Public Services Performance Measurement Strategic Planning Goals and Objectives Financial Policies Summary Compliance with Financial Policies Organization Organization Chart Position Control Roster Map of NSD Service Area Budget Summary...27 Fund Structure Basis of Accounting Basis of Budgeting Budget Appropriation Budget Development Process Budget Amendment Process Budget Calendar for FY 2013/ Sources of Funds/Revenues Uses of Funds/Expenditures Fund Equity Reserves GFOA Budget Award Detailed Tables of Revenues and Operating Expenditures...37 Revenues All Sources Operating Expenditures All Accounts Operating Expenditures By Major Expense Category Operating Expenditures By Department Expenditure Budgets by Department...45 Board of Directors General Manager s Office Administrative Services Safety, Training & Fleet Maintenance Collection System Treatment Plant Operations Treatment Plant Maintenance Treatment Plant Laboratory Engineering Pollution Prevention Water & Biosolids Reclamation Non-Departmental Expenses Capital Improvement Plan Program Description Definition of Capital Expenditures Capital Plan Development Process Vehicle Replacement Guidelines Sources of Capital Expenditure Funding Use of Capacity Charges for Expansion Changes from Prior CIP Summary of FY 2014/15 Capital Projects Unfunded Projects Impact of Projects on Operating Budget FY 2014/15 Capital Project Descriptions FY 2014/15 Capital Projects Allocation of Capacity Charges Ten-Year Capital Improvement Plan Table of Projects Ten-Year Financial Plan Plan Description Link to Strategic Plan Revenue Forecast Operating Cost Forecast Capital Costs Pay-Go vs. Debt Financing Ten-Year Cash Flow Long Term Planning Committee Recommendations Sewer Service Charge Rate Adequacy Calculation of Sewer Service Charge Rate Based on Asset-Life-Cycle Cost Debt Debt Policy Current Debt Obligations Debt Covenants Debt Capacity & Debt Limitations Future Debt Issues Debt Coverage Ratio Calculation Debt Service Schedules Appendix A Glossary of Terms Appendix B Statistics & Economic Data Appendix C Strategic Plan Appendix D Financial Policies Appendix E 2013 Performance Measurement Report Appendix F Capacity Charges Report for Fiscal Year 2012/ PDF bookmarks are available to assist in viewing this document. The Table of Contents is hyperlinked throughout. 3

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5 NAPA SANITATION DISTRICT Dedicated to Preserving the Napa River for Generations to Come DATE: June 4, 2014 TO: FROM: SUBJECT: Honorable Board of Directors and Customers served by the Napa Sanitation District Tim Healy, General Manager/District Engineer Jeff Tucker, Director of Administrative Services/Chief Financial Officer FY 2014/15 Operating and Capital Budget On behalf of the entire Executive and Management Team, we are pleased to present to you the Proposed FY 2014/15 Napa Sanitation District Operating and Capital Budget. This Budget is the financial plan for the coming year and serves as a source of information about the District and its programs. Economic Condition Napa County has started to see its local economy start to recover from the recession and anemic growth of the past several years. The unemployment rate in Napa County has dropped to 6.0% (March), below the 6.9% from a year ago and significantly lower than the state rate of 8.4%. Hotel occupancy is also up, a significant indicator of local economic activity in the wine and hospitality industries, with the City of Napa projecting significant increases in transient occupancy taxes through 2020 from both increased economic activity and the development of new hotels in the city. In FY 2013/14, development in the District was still slow and slightly below projections, but activity in planning referrals and the review of development plans for building permits indicates that there are several projects anticipating construction in FY 2014/15. These projects will have an impact on the District, both in the receipt of capacity charges as well as growing the base of sewer service charges. These projects include new hotels, single and multi-family housing developments, and other developments. The FY 2014/15 Napa Sanitation District Operating and Capital Budget was developed with recognition of the slowly improving local economy, incorporating known development projects, but not assuming rapid growth in any specific areas of the economy. Budget Priorities and Direction The proposed budget represents a continuation of the service levels seen in prior years, with the goal of not increasing the operating budget any more than necessary. The budget allocates resources toward activities that implement the goals and objectives established by the Board of Directors in its 5

6 FY 2014/15 Operating and Capital Budget June 4, 2014 Page 2 Strategic Plan, including maintaining a focus on quality customer service, preventive maintenance, and investments in staff and infrastructure that improve efficiency, effectiveness and safety. The proposed budget addresses the following challenges facing the District and the community, with budget priorities and direction developed to address these challenges: Keep Rates and Expenses at the Rate of Inflation. The Board has established a priority of maintaining sewer rate affordability by striving to keep rate growth to no more than the Consumer Price Index (CPI). This has been challenging, as the District s operating expenses (wages, health care, retirement, electricity, chemicals, etc.) tend to increase faster than CPI. For the past 8 years, the District has maintained the goal of not increasing rates beyond inflation by investing in capital projects and processes that reduce operating expenses. Recently, this has meant accepting fats, oil and grease (FOG) into the plant for use in creating biogas used to generate heat and electricity and offset the purchase of electricity from PG&E. In the current budget, the District is replacing its flocculating clarifier with a Dissolved Air Floatation (DAF) clarifier which decreases the amount of chemicals needed to treat the wastewater and saves the District over $100,000 annually. The District is also working with private business partners to develop a waste-to-energy project and a solar energy project to provide further energy cost savings as well as new revenues for the District. Drought Conditions. FY 2014/15 begins with all of California in the third year of lower than normal rain and snowfall. The District is facing this problem head on with its continued focus on expanding recycled water into the community. The use of recycled water offsets the need to use potable water or groundwater for irrigation and landscaping needs. The FY 2014/15 budget includes the continuation of the Phase 1 Recycled Water Expansion Project to increase the quantity of recycled water the District can provide in the summer months from 2,000 acre feet to 3,700 acre feet. The District has partnered with Napa County and the Los Carneros Water District to build 14 miles of recycled water distribution pipe to expand the area where recycled water is available. The District is also part of the North Bay Water Reuse Authority that focuses on the long-term financing of recycled water projects in Marin, Sonoma and Napa Counties. Maintain Assets for Future Generations. Like in most communities, the bulk of the sewer system in the District was built from the 1950s through 1970s. These assets, along with those already in service prior to the Second World War, are deteriorating and reaching the end of their useful lives. It is the District s responsibility to ensure that these assets are maintained appropriately to keep them in service as long as possible, and to replace those assets when necessary to avoid system failures. The District continues to use pay-as-you-go financing for the renewal and replacement of its sewers and other capital assets. The Collection System portion of the capital plan includes the continuation of annual expenses dedicated to main line sewer rehabilitation and lateral replacements, and identifies specific sewer rehabilitation and replacement projects deemed most critical. Position the District for Growth. If the community of Napa is to continue to develop according to its 20-year growth projections and with the densities of use identified in its Downtown Specific Plan, the Napa Sanitation District needs to plan for and build capacity for the anticipated new users of the sewer system and the increased flows and loading in the 6

7 FY 2014/15 Operating and Capital Budget June 4, 2014 Page 3 treatment plant. The proposed budget includes several projects that are designed to accommodate the growth that is anticipated in these plans. They include the installation of aerators on the facultative ponds to increase treatment capacity, the expansion of the Influent Pump Station to accommodate increased flows, and the expansion of the recycled water system to treat the increased flows and maintain the District s commitment to recover and reuse valuable water resources and decrease its discharge into the Napa River. The Ten-Year Capital Improvement Plan (CIP) also includes expansion of other processes, including the aeration basins and the digester several years from now, in an effort to accommodate anticipated growth. Prepare for the Next Economic Downturn. It is inevitable that the anticipated growth in the local economy will be followed by a period of economic slowdown. The District should plan and make decisions now that will position it for the future. The proposed budget represents both a short-term (one year) plan for spending as well as a 10-year look forward in revenues, operating expenses and capital expenditures and strives to ensure that the decisions made this year are sustainable into the foreseeable future. When making decisions regarding capital projects, a total cost of ownership approach is employed, whereby the total cost of a decision, including both the initial capital cost and the ongoing operational costs, are considered. Decisions about changing levels of service are also evaluated long-term to determine the ability to sustain those changes. The proposed budget includes no changes in programs, service levels or staffing levels. The long-range forecast shows the District s reserves funded each year, but there are some years where the capital plan exceeds resources available. This imbalance will need to be addressed. Financial Overview The District maintains one fund for accounting and budgeting purposes. Within the fund there are three departments or subfunds that track the following: 1) operating revenues and expenses, 2) capacity charge revenue, which is a restricted revenue, and 3) capital project expenses and associated revenues, such as grants. Operating expenses total $13.9 million, compared to $13.7 million in FY 2013/14, for an increase of 1.6%. Debt service expenses remained constant at $4.8 million. Intrafund transfers from operating to capital are budgeted at $1.9 million. The proposed capital budget of $37 million is about $6 million more than the FY 2013/14 approved capital budget. The capital budget includes the continuation of construction of the MST recycled water pipeline, with this project being entirely financed by grants and contributions from the County of Napa. The capital budget also includes the construction of the recycled water pipeline in Los Carneros Water District, which is also entirely financed from external contributions. The total operating and capital budget for the District, $55.66 million, is up 12.6% from last year. This increase is made up from a 2.6% increase in Salaries & Benefits from prior year, 0.2% decrease in Services & Supplies, and 19.5% increase in Capital. 7

8 FY 2014/15 Operating and Capital Budget June 4, 2014 Page 4 The District is anticipated to decrease its ending fund equity by $10 million during the fiscal year, due to planned spending of debt proceeds on capital projects. The operating emergency reserves and cash flow reserves are fully funded, per District financial policy. Revenues Summary of the Sewer Service Charges (SSCs), the District s largest source of revenues, are collected annually as assessments on the property tax rolls. This budget continues a policy of not increasing the sewer service charges any higher than inflation, following the stated Board intention to maintain this policy through FY 2015/16. The FY 2014/15 budget includes an increase in the rate of 2.6%, equal to the December 2013 Consumer Price Increase-Urban Consumers (CPI) for the San Francisco/Oakland/ San Jose area. Other revenues were projected conservatively using economic indicators and trend analysis, with particular attention placed on any recent downward trends due to economic conditions. Economicbased revenues such as capacity charges were projected based on specific evidence of activity, and investment earnings rates were assumed to remain flat through next year. More information on the forecast methods can be found in the Sources of Funds/Revenues section of the Budget Summary. FY 2014/15 revenues from all sources are expected to be $45,609,800, excluding intrafund transfers. Projected operating revenue, which excludes revenues associated with capital projects (capacity charges, grants, intergovernmental revenue, bond proceeds and sale of capital assets), increased from almost $19.2 million in FY 2013/14 to almost $19.8 million this year (3.2% increase). Sewer service charges are anticipated to increase 3.3% due to the CPI increase and an increase in the number of users. All other operating revenues in total will increase just 0.4%. Intergovernmental revenues are budgeted at $21,809,000, consisting of $5,236,000 in federal grant revenue for the Phase 1 Recycled Water Expansion project, North/South Recycled Water Pump Station Split project and MST recycled water pipeline project. Capacity charge revenue is projected higher, at $3,925,000, compared to $2,075,000 budgeted (and $1,500,000 actually anticipated) in the prior year, because of an assumed increase in activity from 200 EDU to 450 EDU and due to the fee increase from $8,300 to $8,723 schedule for July 1 as structured in District ordinance. Operating Expenditures Operating expenditures for the District are expected to be $13,868,920 (total operating budget of $20,541,370, minus intrafund transfers of $1,887,500, taxes and assessments of $33,150 and debt service payments of $4,751,800). This represents an increase in budgeted operating expenditures of $208,060 or 1.5%. Including interfund transfers, taxes and debt service, District operations is budgeted to increase $423,220 (2.1%) from the FY 2013/14 budget. Salary and benefit expenses are proposed to increase 2.6%. Five years ago, the District set the path for controlling future salary and benefit costs in successfully negotiated long-term agreements with its unions that provided predictability for salary growth while limiting employee benefit cost growth. 8

9 FY 2014/15 Operating and Capital Budget June 4, 2014 Page 5 The District is currently renegotiated its labor agreements, but new Memoranda of Understanding will not be ratified and approved until after the adoption of the budget. For FY 2014/15, there are again no increases in staffing levels for the District, with salary and benefits budgeted to accommodate the anticipated new labor agreements. All current and future position vacancies will be evaluated to determine whether the position is still necessary and classified correctly for the position prior to rehiring. Services and Supplies budgets in total are proposed to be 0.2% less than FY 2013/14. There are anticipated savings in several line items, as the District maintains the direction to have a zero growth budget in those cost areas that are controllable. The most significant cost controls are in chemicals (20.7% reduction) as this next year is the first year of operation of the new Dissolved Air Floatation (DAF) clarifier, which is offset by a 16.6% increase in electricity for the DAF, with a net savings of $120,620. Other reductions include several areas where one-time only projects were removed and not replaced with other projects. Five one-time projects were added, projects that were either identified in the District s Strategic Plan for completion this year or at the request of the Board: $100,000 for an Industrial Waste Treatment Option study, to determine the feasibility of a winery waste receiving station at the plant $30,000 for a Communications and Outreach Plan, to craft messages, identify audiences and develop strategies for pollution prevention and general district communications $15,000 for a new employee survey to follow up on the surveys conducted in 2010 and 2011 $40,000 for an Employee Master Plan, to develop a long-term plan for the proper staffing levels and employee skills necessary to operate, maintain and administer the District, given the anticipated changes in processes and aging of the facilities $15,000 to update the District s Strategic Plan Capital Expenditures The District maintains a Ten-Year Capital Improvement Plan (CIP) and includes the acquisition and construction of new facilities and assets as well as the renewal and rehabilitation of existing assets, when that rehabilitation extends the useful life of those assets. The District continues to implement the strategies identified in the Collection System Master Plan, through implementation of stormwater and groundwater inflow & infiltration (I/I) reduction projects. The Wastewater Treatment Plant Master Plan was approved in March 2011, with the capital components included in the capital plan. The CIP continues projects to expand the recycled water filtration system and replace the Influent Pump Station, both vital projects identified in the Treatment Plant Master Plan and necessary to meet increasing recycled water demand and improve the operational resiliency of the District. The capital expenditure budget for FY 2014/15, the first year of the ten-year plan, is $37.0 million. Two projects, the MST Recycled Water Pipeline ($7,000,000) and the LCWD Recycled Water Pipeline ($8,000,000) are paid for by external sources. 9

10 FY 2014/15 Operating and Capital Budget June 4, 2014 Page 6 Further details can be found in the Capital Improvement Plan chapter of this budget document. Debt and Debt Service The District has four distinct debts for which it pays annual debt service. All of the District s debt has a fixed interest rate. The District no longer has any variable rate debt outstanding. Total debt service for FY 2014/15 is expected to be just under $4.8 million. Fund Equity and Reserves The ending fund equity for FY 2013/14 is estimated to be $23,943,721. This number assumes that most of the capital budget in FY 2013/14 is spent, or that any underspending is carried forward into next fiscal year. As proposed, the ending fund equity for the District is projected to be $13,896,730 on June 30, 2015 and is allocated as follows: $2,085,000 15% Operating Reserve This is 15% of the District s budgeted operating expenditures, excluding taxes, transfers and debt service. $8,240,000 Operating Cash Flow Reserve This amount is necessary on July 1 to cover the anticipated operating expenses of the District between the start of the fiscal year and December, when the District receives the bulk of its cash receipts from sewer service charges billed on property tax statements. $3,571,730 Available for Use This is the projected amount of fund equity available to the District for use in operations or on capital at the end of FY 2014/15. This amount has been identified for use in the capital program in future years. Following is a summary table of the revenue, expenditure and interfund transfer budgets for FY 2014/15, along with information on fund equity and reserves. 10

11 FY 2014/15 Operating and Capital Budget June 4, 2014 Page 7 Budget Summary FY 13/14 FY 14/15 Percent Adjusted Budget Budget Change Beginning Fund Equity $46,516,757 $23,943,700 (48.5%) Revenue All funds, excluding transfers Sewer Service Charges (incl. delinquencies) $18,351,000 18,963, % Capacity Charges 2,075,000 3,925, % Waste Hauler Fees 234, ,000 (1.7%) Recycled Water Sales 283, , % Land Leases 135, ,000 (16.7%) Intergovernmental / Grants 5,325,000 21,809, % Interest on Invested Funds 182, ,100 (36.2%) Construction/Building Permit Review Fees 18,000 35, % Penalties on Delinquent Sewer Fees 50,000 25,000 (50.0%) Sale of Capital Assets 0 20,000 - Other Revenues 39,000 54, % Total Revenues $26,692,850 $45,609, % Expenditures All funds, excluding transfers Salaries & Benefits $8,437,640 $8,656, % Services & Supplies 5,223,220 5,212,080 (0.2%) Taxes & Other 25,050 33, % Subtotal Operating Expenses $13,687,910 $13,902, % Capital Expenditures $30,970,430 $37,002, % Debt Service (incl. debt administration expenses) 4,775,240 4,751,800 (0.5%) Subtotal Capital Expenses $35,745,670 $41,754, % Total Expenditures $49,431,580 $55,656, % Ending Fund Equity $23,778,027 $13,896,730 (41.6 %) Reserves 15% Operating Reserve $2,056,000 $2,085, % Operating Cash Flow Reserve 8,000,000 8,240, % Total Reserves $10,056,000 $10,325, % Available for Use (Ending Fund Equity minus Reserves) $13,722,027 $3,571,730 (74.0%) FY 13/14 FY 14/15 Percent Adjusted Budget Budget Change Intrafund Transfers Transfer from Operations to Capital Projects $1,657,000 $1,887, % Transfer from Expansion to Capital Projects 2,075,000 3,847, % Transfer from Debt Proceeds to Capital Projects 15,631,900 20,000, % Total Intrafund Transfers $19,363,900 $25,734, % 11

12 FY 2014/15 Operating and Capital Budget June 4, 2014 Page 8 Ten-Year Budget Projections The District has been able to weather low levels of SSC growth and decreases in non-ssc revenues in recent years through prudent control of its expenditures. The reduction of capacity charge revenue, as a result of reduced demand for new connections to the system, and the reduction of lease revenue from the Somky property, requires special emphasis and attention be placed on the ongoing review of the Capital Improvement Plan by District management and the Board. The cost of employee benefits continues to rise for the District. Specifically the cost of health and retirement benefits is a major contributor to increased operating costs over the foreseeable future. Energy and chemical costs in general will likely rise over the next ten years and require regular monitoring by staff. The new DAF clarifier reduces chemical use but increase electricity, with a net positive impact on operational costs, but the increased demand for recycled water anticipated when the new filters and pipelines are constructed will offset those savings. The forecast assumes modest annual increases in sewer service charges (by CPI), annual increases in capacity charge rates (by CPI), a significant increase in development (particularly hotels), and a fee increase for recycled water in FY 2015/16. Further detailed information regarding the District s Ten- Year Financial Plan can be found in the budget document. The Ten-Year Financial Plan shows the District unable to fund its current and future operating and capital plan. The Ten-Year Financial Plan shows that it is underfunded by about $2.9 million in FY 2017/18, and remains underfunded for two additional years. Identified Areas of Potential Significant Variability in Forecast The Ten-Year Financial Forecast includes various assumptions about the rates of increase for revenues and expenditures. There are two assumptions in the forecast that have significant risk or variability associated with them. If these assumptions do not materialize as projected, it will be necessary for the District to reevaluate its operating and capital budgets and make adjustments. The first major assumption is in the forecast for recycled water usage. As part of the fee setting process in FY 2011/12 to set the recycled water fee for 2016 and beyond, the District assumed that recycled water sales would be 2,400 acre feet. Current sales are estimated at approximately 1,200 acre feet. The projected increases in future years assumes that Napa State Hospital switches over to recycled water (200 AF), that the MST area takes 500 acre-feet, that HCV Napa completes development of the Montelcino Resort and Golf Club (300 AF), and that the St. Regis Resort development is completed (200 AF). It is also assumed that if these projects do not take water, that water would be available for other users, such as the Los Carneros Water District. The assumptions seem reasonable given recent construction and development activity, but if these use targets are not met, there will be insufficient sales to meet the revenue projections. The second major assumption is in capacity charge revenues. The current forecast assumes the sale of 450 EDU in capacity charges in FY 2014/15, increasing to 515 in FY 2015/16, and to 795 in FY 2016/17 to recognize likely hotel developments in the service area. These numbers can be compared to the 217 EDU in FY 2012/13 and the estimated 180 EDU in FY 2013/14. If economic 12

13 FY 2014/15 Operating and Capital Budget June 4, 2014 Page 9 development does not increase by these levels, there will be lower than anticipated revenues to pay for capital projects, and lower than anticipated sewer service charges to pay for ongoing operations. Acknowledgments The General Manager's Office and the Administrative Services Department staff sincerely appreciate the direction offered by the District s Finance Committee, Long Term Planning Committee and Board of Directors, and the cooperation and assistance of District staff, in developing a responsible and thoughtful budget for FY 2014/15. Many people throughout the organization have put a great deal of effort and skill into producing this document and the proposed budget. Finally, as always, we look forward to your comments and suggestions so that we may continue to refine the document and make it as readable and useful as possible to the District Board, its customers, and the community at large. Respectfully submitted, Tim Healy General Manager/ District Engineer Jeff Tucker Director of Administrative Services/ Chief Financial Officer 13

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15 Napa Sanitation District Overview Mission It is the mission of the Napa Sanitation District to collect, treat, beneficially reuse, and dispose of wastewater in an effective and economical manner that respects the environment, maintains the public's health and meets or exceeds all local, state and federal regulations. History Napa Sanitation District, located in the Napa Valley in Northern California, has been serving the public since it was organized under the California Health and Safety Code in November Soscol Water Recycling Facility The District provides wastewater collection, treatment and disposal services to the residents and businesses in the City of Napa and surrounding unincorporated areas of Napa County. As a special district, the Napa Sanitation District is an independent local agency governed by a Board of Directors made up of three elected officials from the City and County and two public appointees. Until 1998, wastewater was processed at both the Imola Treatment Plant located north of Imola Avenue and west of Soscol Avenue, and the Soscol Water Recycling Facility (SWRF) near Napa County Airport. In 1998, all wastewater treatment activities were shifted to the SWRF. The Imola Avenue treatment facility was demolished in 2002 after completion of the Napa County Flood Control District Project relocating the railroad tracks onto the District s Imola property. The District's Administration, Engineering and Collection System offices were relocated to the SWRF in Public Services There are over 36,500 connections within the District's Sphere of Influence of approximately 21 square miles of service area. Through a network of approximately 270 miles of underground sewer mains, assisted by a system of three lift stations, the sewage makes its way to the SWRF for treatment. (Additional demographics are available in Appendix B Statistics and Economic Data.) The SWRF is a secondary and tertiary biological physical-chemical treatment facility that treats a mixture of domestic and industrial wastewater. The District wastewater processes include primary treatment, activated sludge facilities, oxidation ponds, clarifiers, sludge digestion and solids de-watering facilities. The SWRF has a dry weather treatment design capacity of 15.4 million gallons per day (MGD). The wastewater is treated and discharged in various manners, depending on the source of the wastewater and the time of year. The District's regulating body, the Regional Water Quality Control Board, permits discharge to the Napa River from November 1 through April 30 (the wet season period). The average annual wet weather season discharge of treated water to the Napa River is approximately 13.8 MGD. The District provides full secondary treatment at its wastewater facility whenever discharging to the Napa River. Recycled water storage From May 1 through October 31 (the dry season period) discharge to the Napa River is prohibited and wastewater is either stored in stabilization ponds or treated and beneficially reused for landscape irrigation in industrial parks, golf courses, parks, pasturelands and vineyards. This high quality Title 22 Unrestricted Use recycled water is provided to all recycled water users. 15

16 Performance Measurement The District created and issued its Performance Measurement Report for Calendar Year 2013 in April The report identifies 64 performance measures that, when taken as a whole, should give the reader a sense of how well the utility is performing and being managed. The report uses the Effective Utility Management (EUM) framework for presenting the performance information. EUM was developed in 2009 by six major water and wastewater associations and the United States Environmental Protection Agency to help utility managers make practical, systematic changes to achieve excellence in utility performance. This framework is specific to water and wastewater utilities and provides for the possibility of comparing the District to other wastewater utilities once more providers begin using EUM for measuring and reporting on performance. The performance measures are organized into EUM s Ten Attributes of Effectively Managed Water Sector Utilities: 1. Product Quality 2. Customer Service 3. Employee and Leadership Development 4. Operational Optimization 5. Financial Viability 6. Infrastructure Stability 7. Operational Resiliency 8. Community Sustainability 9. Water Resource Adequacy 10. Stakeholder Understanding & Support The District rates satisfactory in 51 measures (80%). These measures include, among many others, meeting NPDES discharge limits for BOD and total suspended solids, having fewer sewer overflows than the state average, lower than average worker injury rates, solid financial measures, and proactive practices on preventive maintenance. The District rates watch on eight measures (12.5%). A watch designation signifies that the District is in danger of not meeting its goals, that the trend is indeterminate, or that there is insufficient data to make an assessment. Measures in this category include service call response time, asset inventory, renewal and replacement of sewer mains and public laterals, number of insurance claims, long-term recycled water supply adequacy, specific responses in the employee survey, and the comparative ranking of the District s sewer service charge rate. The District rates unsatisfactory on two measures (3%). Unsatisfactory signifies that the District has not met its goals or that the trend is negative. Measures here include the uptime for pumps at the Influent Pump Station and critical parts and equipment resiliency. Several of the performance measures have been identified as Key Performance Indicators (KPIs) for determining whether the District is meeting its Strategic Goals. Those KPIs have been identified below in the Strategic Planning Goals and Objectives section. Most of the performance measures in the Performance Measure Report have also been included in the narratives of the Expenditure by Department section of this budget document. A complete copy of the Performance Measurement Report for Calendar Year 2013 can be found in Appendix E of this budget. 16

17 Strategic Planning Goals and Objectives In May 2013, the Board of Directors updated its Strategic Plan, articulating the long-term goals, objectives and priorities of the District. The following are excerpts from the Strategic Plan. The Strategic Plan provides detail on these goals and specific objectives, a copy of which can be found in Appendix C of this document. On a quarterly basis, progress on these goals and objectives is reported to the Board of Directors and posted on the District s website. Mission The mission of the District is to collect, treat, beneficially reuse and dispose of wastewater in an effective and fiscally responsible manner that respects the environment, maintains the public s health and meets or exceeds all local, state and federal regulations. Goal 1 - Infrastructure Reliability The goal is to build, maintain and operate a cost-effective and reliable wastewater treatment system for the District s service area. Systematic replacement of the District s aging infrastructure is priority number one. A long term capital facilities plan is needed, drawing on accurate information about current facility conditions and projects of future service area needs: five, ten or more years from now. The District must ensure that treatment capacity will be in place to address current and projected future needs. Key Performance Indicators Actual Actual Actual Actual Estimate Target Indicator FY 09/10 FY 10/11 FY 11/12 FY 12/13 FY 13/14 FY 14/15 Rating Renewal & Replacement of Assets 1.4% 2.8% 3.0% 2.6% 3.0% 2% - 4% Sewer Main Renewal & Replacement 0.0% 0.7% 0.7% 0.0% 0.7% 1% Public Sewer Lateral Renewal & 0.8% 0.8% 0.6% 0.2% 1.0% 1% Replacement Collection System Failures Plant Planned Maintenance Ratio 51.0% 49.9% 63.7% 58.0% 63% > 60% (Hours) Collections Planned Maintenance 87.7% 91.7% 90.4% 87.6% 90% > 90% Ratio (hours) Uptime for Cogeneration Engine 68.4% 82.0% 83.6% 96.3% 96% > 95% Uptime for Pumps at Influent Pump 92.9% 66.6% 81.1% 76.7% 80% > 95% Station (Indicators are hyperlinked to Performance Measurement Report in Appendix E.) Strategic Objectives: Status: 1A: Implement Treatment Plant Master Plan critical projects, including pond Ongoing aeration, recycled water equalization and filters and DAF clarifier, and replacement of the influent pump station 1B: Complete cost/benefit analysis of wet weather inflow/infiltration Ongoing 1C: Complete SCADA master plan implementation Complete Related Department Objectives: Rehabilitate 60 public laterals (Collection System) Work to eliminate higher maintenance sewer mains by replacing or repairing them (Collection System) 17

18 Enhance and organize inventory system to reduce down time (Plant Maintenance) Begin 4-year project to replace Rotork Actuators and improve reliability (Plant Maintenance) Complete pump seal water delivery upgrades (Plant Maintenance) Replace Influent Pump Station (Capital Improvement Plan) Install new spare digester mixer to improve redundancy and reliability (Capital Improvement Plan) Goal 2: Financial Stability The goal is to ensure adequate fiscal resources to fulfill the District s mission. The District Board has a fiduciary responsibility to ensure that adequate financial resources are in place to operate the District and carry out its mission. Key Performance Indicators Actual Actual Actual Actual Estimate Target Indicator FY 09/10 FY 10/11 FY 11/12 FY 12/13 FY 13/14 FY 14/15 Rating Bond Rating AA- AA- AA- AA- AA- AA- Debt Service Coverage Ratio 275% 328% 325% 231% 191% > 125% Revenue-to-Expenditure Ratio 0.05 (0.02) > 0 Rates Based on Life-Cycle Cost 0.4% 4.3% 7.9% 6.1% (0.5%) ± 5% Sewer Bill Affordability 0.64% 0.64% 0.64% 0.66% 0.66% < 1% (Indicators are hyperlinked to Performance Measurement Report in Appendix E.) Strategic Objectives: 2A: Develop non-rate, revenue-generating opportunities that fit within the District s mission, either on its own or through private/public investment 2B: Complete a study of plan check/inspection fees and methodology options for calculating and assessing capacity charges 2C: Provide policy choices regarding long-term strategies and goals for replacement of sewers 2D: Conduct a Sewer Service Charge fee study prior to the next Proposition 218 hearing Status: Ongoing Complete Ongoing FY 15/16 Related Department Objectives: Analyze assumptions in long-range plans for sensitivity to economic or regulatory changes (Administrative Services) Review cash flow and emergency reserves for adequacy (Administrative Services) Maintain and adjust ten-year plan for fleet sustainment, acquisition, rehabilitation and attrition (Safety, Training and Fleet Maintenance) Continue to implement an effective life cycle equipment replacement schedule for better budgetary expense projections (Plant Maintenance) Develop and utilize capital program management system to monitor and report progress of active capital projects (Engineering) Goal 3: Operational Capability The goal is to implement and maintain effective operational practices. The District Board wants to operate the District at or above best practices, utilizing proven technology. Customers, ratepayers and internal staff all deserve high quality service. Flocculating clarifier demolition 18

19 Key Performance Indicators Actual Actual Actual Actual Estimate Target Indicator FY 09/10 FY 10/11 FY 11/12 FY 12/13 FY 13/14 FY 14/15 Rating Compliance with NPDES Permit 100% 100% 100% 100% 100% 100% Sanitary Sewer Overflows (Cat. 1) per 100 miles Self-Generated Electricity 22.6% 23.0% 22.1% 23.3% 33.7% > 25% Electricity Consumption Efficiency (MWh per million gallons-summer) < 6.0 Chemical Consumption (gallons hypochlorite per MG treatedsummer) < 200 Recycled Water Service Availability 100% 100% 98% 100% 100% 100% (Indicators are hyperlinked to Performance Measurement Report in Appendix E.) Strategic Objectives: 3A: Prepare safety and security vulnerabilities study and public communications plan 3B: Develop policy and programs regarding the impact of wineries based on the 2009 Winery Study Status: Complete Ongoing Related Department Objectives: Continue efforts to bring wineries into compliance with sewer use regulations (General Manager s Office) Continue to respond to the needs of the community in a timely and professional manner within 30 minutes, while trying to reduce the number of emergency service calls (Collection System) Continue to maintain efficiency of preventive maintenance operations, cleaning at least 40% of the District sewer mains per year (Collection System) Video inspect 10% of the sewer mains in the District s system (Collection System) Continual process optimization of the plant control systems to achieve a reduction in chemical and energy costs (Plant Operations) Install additional online instrumentation, reducing the amount of chemicals needed for treatment and reducing on-call operator time (Plant Operations) Continue producing an effluent that meets the NPDES permit requirements (Plant Operations) Continue enhancement and organization of the inventory system to reduce down time (Plant Maintenance) Review and update operational data sampling and analysis management for an efficient process control operational strategy (Plant Laboratory) Review and return development plans within 30 days of submittal to District (Engineering) Develop performance goals for increased and improved inspection of non-categorical dischargers, and continue monitoring, sampling and reporting for all categorical dischargers (Pollution Prevention) Continue the Jameson Reuse Site sprinkler rehabilitation project, to increase the efficiency of recycled water application (Water & Biosolids Reclamation) Goal 4: Employee Development The goal is to maintain a dynamic and skilled workforce through employee engagement, professional development and opportunities for advancement. The District Board wants to create a positive and respectful working environment that encourages all employees to do the best job possible for the ratepayers of the District. Training on Arc Flash protective equipment 19

20 Key Performance Indicators Actual Actual Actual Actual Estimate Target Indicator FY 09/10 FY 10/11 FY 11/12 FY 12/13 FY 13/14 FY 14/15 Rating Safety Training Completed On-Time na na 79% 79% 99% > 90% Employee Survey: Supervisor supports career growth na na na > 3.0 Employee Survey: Adequate resources to do job na na na > 3.0 Employee Survey: Received training to work efficiently na na na > 3.0 Employee Survey: High job performance is rewarded na na na > 3.0 (Survey: 1=Unfavorable to 5=Very Favorable) (Indicators are hyperlinked to Performance Measurement Report in Appendix E.) Strategic Objectives: Status: 4A: Develop a management succession plan and identify and train back-up staff Complete for all mission-critical positions 4B: Conduct third employee survey FY 14/15 4C: Develop a transition plan for the new administrative building Complete 4D: Create an employee master plan FY 14/15 4E: Prepare for and complete MOU negotiations Complete Related Department Objectives: Continue to provide direction to all departments, aligning efforts to promote and be consistent with the District s goals and policy directives (General Manager s Office) Complete an update of the District s Employee Job Descriptions (Administrative Services) Develop and implement periodic review plan for District safety policies and programs (Safety, Training and Fleet Maintenance) Amend current safety policies and programs to meet new requirements due to relocation of three departments (Safety, Training and Fleet Maintenance) Prepare for and coordinate the safety review conducted by CSRMA, the District s worker s compensation insurance carrier (Safety, Training and Fleet Maintenance) Move forward in gathering, storing and disseminating asset and work information in an economical way with completeness and accuracy, including sharing with other departments in the District and others as needed (Collection System) Develop and implement an analyst educational outreach training program (Plant Laboratory) Goal 5: Community Outreach and Communication The goal is to provide ratepayers with the information they need to understand the District s mission, operations, finances and rate structures. The District Board wants to ensure that the District operates in a transparent manner and serves as a resource to all ratepayers of the service area. Key Performance Indicators Actual Actual Actual Actual Estimate Target Indicator FY 09/10 FY 10/11 FY 11/12 FY 12/13 FY 13/14 FY 14/15 Rating Media Coverage Quantity > 20 Media Coverage Accuracy 100% 100% 92% 86% 90% > 85% Customer Satisfaction-Plug Ups (percent good or excellent ) na na 100% 99.5% 100% > 95% Customer Satisfaction-Cleanouts (percent good or excellent ) na na 90.0% 94.3% 97.9% > 95% (Indicators are hyperlinked to Performance Measurement Report in Appendix E.) 20

21 Strategic Objectives: 5A: Be proactive in developing partnerships with local businesses and other public agencies to achieve common goals 5B: Create a communications plan to address NSD outreach and public information needs Status: Ongoing FY 14/15 Related Department Objectives: Complete the District s fifth Performance Measurement Report (Administrative Services) Implement the findings in the third party audit of the Laboratory s Quality Assurance Program, SOPs and Analyst Training Program (Plant Laboratory) Respond to requests for information from the general public and other local agencies within three working days of request (Engineering) Expand the medication collection program to include more drop-off sites (Pollution Prevention) Conduct plant tours and make public presentations (Pollution Prevention) Promote and deliver classroom presentations targeting elementary, middle and high school students (Pollution Prevention) Develop and disseminate to stakeholders pollution prevention BMPs as necessary (Pollution Prevention) Complete activities necessary to achieve Fish Friendly Certification at the reuse sites (Water & Biosolids Reclamation) Goal 6: Resource Recovery The goal is to implement policies and technologies to recover resources from wastewater for beneficial reuse. The District Board wants to recover resources for reuse when economically viable and a market exists for their beneficial reuse. The District must also use the resources available to ensure a reliable energy supply during emergency conditions as well as during normal times. Key Performance Indicators Actual Actual Actual Actual Estimate Target Indicator FY 09/10 FY 10/11 FY 11/12 FY 12/13 FY 13/14 FY 14/15 Rating Recycled Water Reused on Non- District Property 66% 54% 56% 62% 72% > 60% Biosolids Beneficially Reused 56% 18% 90% 100% 100% > 90% Digester Gas Beneficial Reuse 88% 85% 94% 91% 98% > 90% (Indicators are hyperlinked to Performance Measurement Report in Appendix E.) Strategic Objectives: Status: 6A: Implement capital projects in partnership with local agencies for the FY 14/15 distribution of recycled water 6B: Study the feasibility of expanding system storage capacity for recycled water Ongoing 6C: Set a target for the percentage of energy used by the District that is selfgenerating, Ongoing and set long-term strategies for achieving that percentage 6D: Explore the possible beneficial reuse of algae FY 15/16 Related Department Objectives: Continue to participate in inter-agency communications and planning for delivering recycled water to the Milliken-Sarco-Tulocay (MST) creeks area (Board of Directors) Develop method for delivering fats, oil and grease (FOG) collected from siphon to the FOG receiving station at SWRF (Plant Operations) Optimize production of biogas in digester resulting from FOG receiving program (Plant Operations) Assist engineering in the design of the recycled water expansion project (Plant Operations) With the City of Napa, promote the Recycle More Program that provides curbside collection of used cooking oil for use as biofuel (Pollution Prevention) 21

22 Continue to partner with local sheep farmers for vegetation management at Jamison Ranch and hay farmers on Somky Ranch, putting biosolids and recycled water to beneficial agricultural reuse (Water & Biosolids Reclamation) Continue construction of the Phase 1 Recycled Water Expansion project (Capital Improvement Program) Begin construction of the MST recycled water pipeline (Capital Improvement Program) Continue planning efforts within the North Bay Water Reuse Project for future development of recycled water programs and EIR/EIS documentation (Capital Improvement Program) Financial Policies Summary The District maintains, and regularly reviews and revises, a comprehensive set of Financial Policies to govern the overall financial management and health of the District. Policy areas include: Reserves Revenue Budgeting and Capital Asset Management Debt Issuance and Management Investments Financial Reporting Accounting Several of the Financial Policies have direct impact on the construction of the budget: Balanced Budget the District maintains a balanced budget and does not use long-term debt to fund short-term or operational expenses. Operating Reserves the District maintains an operating reserve at least equal to 15% of budgeted annual operating expenses, excluding debt service and transfers. Liquidity the District maintains a liquidity reserve to ensure adequate cash is on hand to cover expenses in those months where expenses outpace revenues. The majority of the District s revenues are received in December and in April through property assessments. Revenues the District estimates revenues conservatively and does not use one-time or unpredictable revenues to fund ongoing expenses. Maintenance the District protects its investment in its capital assets by budgeting for their adequate maintenance as a priority. Debt the District will not issue debt unless it can pay the debt service and still meet its other obligations from current revenues. A complete copy of the Financial Policies can be found in Appendix D of this document. Compliance with Financial Policies The District is in full compliance with the Financial Policies adopted in May 2012, as described above and provided in their entirety in Appendix D. Specifically, the District has taken the following actions to ensure compliance with the Financial Policies: The annual operational expenditures for the District are less than the annual revenue forecasted to be received, meeting the requirement for a balanced budget. The District has designated an Operating Reserve of 15% of budgeted operating revenues ($2,085,000) and a Cash Flow/Liquidity Reserve of $8,240,000. These reserves meet the minimum requirements established in the Financial Policies. The District has estimated revenues conservatively for the current fiscal year. Financial Policy Compliance NSD Policy Target FY 14/15 Balanced Budget Operating revenues minus $5,920,780 operating expenditures > $0 Operating Reserve 15% of Operating Budget 15.2% Cash Flow Reserve As necessary $8.24 million Debt Coverage Ratio 1.25x coverage 2.07x 22

23 Additionally, one-time revenue sources have not been used to balance the operating budget, and there are no unpredictable revenues forecast in the budget or used to balance the budget. The budget includes adequate resources for the maintenance of District assets. There are no deferred maintenance projects, either in the operating budget or in the capital budget. Maintenance and renewal/rehabilitation projects take priority over new projects in annual and long-term planning. There are adequate revenues available to transfer to the Capital Projects Fund to meet the near-term needs in the Capital Improvement Plan, although there are some shortfalls projected in some years of the plan. A description of how the District will manage those shortfalls can be found in the Capital Improvement Plan section of this budget document. The District has adequately budgeted to meet all of its debt service requirements, and has maintained its debt service coverage ratio at a level higher than is required by bond covenants. Organization The Napa Sanitation District is governed by a Board of Directors. Two directors are members of the Napa City Council. One director is a member of the Napa County Board of Supervisors. Two directors are citizen appointees, one appointed by the City and one by the County. The District is managed by a General Manager. There are five main departments in the District: Administration: includes finance and accounting services, human resources, risk management, safety and training, fleet management, pollution prevention and outreach, and general administrative services. This Department includes Board of Directors, General Manager s Office, Administrative Services, Safety, Training & Fleet Maintenance, Pollution Prevention, and Non-Departmental Expenses in the Expenditure Budgets by Department section of this budget document. Wastewater Treatment Plant: includes operation and maintenance of the wastewater treatment plant and laboratory services. This Department includes Treatment Plant Operations, Treatment Plant Maintenance, and Treatment Plant Laboratory in the Expenditure Budgets by Department section of this budget document. Collection System Maintenance: includes preventive and corrective maintenance and operation of the sewer system. This Department includes Collection System Maintenance in the Expenditure Budgets by Department section of this budget document. Water and Biosolids Reclamation: includes recycled water system management and disposal of biosolids through land application. This Department includes Water & Biosolids Reclamation in the Expenditure Budgets by Department section of this budget document. Engineering: includes development review, capital project management, project design/engineering and inspection. This Department includes Engineering in the Expenditure Budgets by Department section of this budget document. 23

24 Organization Chart CUSTOMERS Board of Directors Financial Auditor (Contracted Service) Gallina LLP General Manager / District Engineer 1 FTE Legal Counsel (Contracted Service) Meyers Nave Assistant General Manager 1 FTE Clerk of the Board / Human Resources Officer 1 FTE Director of Admin. Services / Chief Financial Officer 1 FTE Engineering 6 FTE Accounting & Office Support 4 FTE Collection System 13 FTE Safety, Training & Fleet Maintanance 1 FTE Water & Biosolids Reclamation 4 FTE Management Analyst & Outreach Coordinator 1 FTE Treatment Plant Total: 51 Employees Operations 9 FTE Maintenance 5 FTE Laboratory 4 FTE 24

25 Napa Sanitation District Position Control Roster As adopted on July 1 Position Series (excluding Board Members) FY 11/12 Adopted FY 12/13 Adopted FY 13/14 Adopted FY 14/15 Proposed General Manager's Office General Manager Assistant General Manager Administrative Services Director of Administrative Services/Chief Financial Officer Clerk to the Board/Human Resources Officer Senior Accountant Accountant Senior Office Assistant Office Assistant Administrative Assistant I/II Management Analyst & Outreach Coordinator Safety, Training and Fleet Maintenance Safety, Training & Fleet Maintenance Officer Collections System Maintenance Collection System Manager Collection System Supervisor Collection System Technician Collection System Worker III Collection System Worker IT/I/II Treatment Plant Operations Plant Manager Operations Supervisor Operator OIT/I/II/III Treatment Plant Maintenance Plant Maintenance Supervisor Equipment Maintenance Specialist I/II Plant Attendant Treatment Plant Laboratory Lab Supervisor Laboratory Technician I/II Engineering Senior Civil Engineer Junior/Assistant/Associate Engineer District Inspector I/II Senior Construction Inspector Construction Inspector Water & Biosolids Reclamation Reclamation Systems Director Reclamation Maintenance Worker I/II Plant Attendant Totals

26 Napa Sanitation District Map of NSD Service Area NSD Sphere of Influence NSD Service Area 26

27 Budget Summary Fund Structure The District s financial structure is comprised of one enterprise fund. This fund includes all District revenues, including restricted revenues. The fund also includes all District expenditures, including operating expenditures, debt service and capital expenditures. Under this structure, restricted revenues (including associated interest earnings) are still accounted for separately and discretely, as required by state law. Basis of Accounting The Basis of Accounting refers to the specific time and method at which revenues and expenses are recognized in the accounts and reported in the financial statements. The Basis of Accounting for the District in its financial statements is full accrual. However, the budget is adopted on a modified accrual basis of accounting consistent with Generally Accepted Accounting Principles (GAAP). Under the modified accrual basis, revenues are recognized when they are susceptible to accrual, i.e., when they become both measurable and available. Measurable means the amount can be determined and available means collectible within the current period or soon enough thereafter to be used to pay liabilities of the current period. Expenditures are recorded when the related liability is incurred. Capital expenditures and debt principal payments are included in the annual adopted budget and used as a limit on expenditures, but these expenses are removed when recorded in the financial statements to conform to GAAP. Basis of Budgeting The District s budgetary procedures conform to state regulations and Generally Accepted Accounting Principles. While the District uses full accrual accounting in its annual financial statements, the District uses a modified accrual basis of accounting for budgeting and reporting on budgeted versus actual expenditures in its monthly and quarterly reports. The following are some of the differences between the way the District budgets and the way it accounts for revenues and expenses in its financial statements: Grant revenues are budgeted on a modified cash basis rather than an accrual basis; Fixed assets are depreciated for some financial reporting, but are fully expensed in the year acquired for budgetary purposes; and Capital expenditures and debt principal payments are budgeted as expenses for budget authority and compliance purposes but are removed in annual financial reporting. The District budgets this way so that it is easier for rate payers and stakeholders to see and track different types of expenses within the budget. Budget Appropriation Budgets are adopted for all expenditures of the District. Total operating expenses and total capital expenses are adopted as separate appropriations. The General Manager is authorized to transfer an unlimited amount of appropriation between operating departments so long as the total operating expense appropriation does not increase. The General Manager is also authorized to transfer appropriation between capital projects as long as the total capital appropriation does not increase. Only the Board of Directors can increase the total allowable operating and capital appropriations. The General Manager is authorized to hire regular employees up to the number approved by the Board of Directors, in accordance with the Position Control Roster. Budget appropriations lapse at the end of the fiscal year. Unspent amounts on specific capital and operations projects may be carried forward to the following fiscal year only with the authorization of the Board of Directors. Budget Development Process The budget process begins each year with a review of current expenditures, to determine how well the budget plan is working. Unanticipated expenses are identified, and revenue and expenditure patterns are analyzed. This information is presented to the Finance Committee, a subcommittee of the full Board of Directors. With this information, the Finance Committee, the General Manager and the Chief Financial Officer develop recommendations on assumptions and policy direction for the next budget year. These recommendations are brought to the full Board of Directors for input and approval. With this direction, department managers develop line item proposals. At the same time, the Capital Program Manager works with department managers 27

28 to update the Ten-Year Capital Improvement Plan (CIP). Proposals are made to the Chief Financial Officer and General Manager, who review the proposals and make changes, as appropriate. The proposed Operating Budget is provided to the Finance Committee, a subcommittee of the Board of Directors, who reviews the budget for consistency with the Board s budget direction and to ensure that there are adequate resources aligned to meet Board priorities. The proposed CIP is provided to the Long Term Planning Committee, a subcommittee of the Board of Directors, to review the CIP. Both committees make reports and recommendations to the full Board of Directors. The proposed budget and CIP are presented to the Board of Directors, and meetings are held to seek input from interested stakeholders and the general public. The Board can direct staff to make changes to the proposed budget. All of the changes are then compiled and presented to the Board for final adoption of the budget and CIP. Budget Amendment Process During the year, the budget can be increased through a budget amendment resolution, voted on and approved by a majority of the Board of Directors during a regular board meeting. There is no legal restriction on the amount or frequency that the budget can be amended. Budget Development Process Master Plans Revenue Forecast Budget Assumptions District Strategic Plan Financial Policies Staff Recommended Ten-Year CIP Staff Recommended Annual Budget Analysis of Impacts Long-Term Planning Committee Input Finance Committee Input Long-Term Planning Committee Recommended Ten-Year CIP Finance Committee Recommended Annual Budget Board Review & Input Board Review & Input Stakeholder Input Adopted Budget & Ten-Year CIP Citizen Input Budget Calendar for FY 2014/15 Jan. 23, 2014 Finance Committee meeting, to discuss budget development calendar, assumptions for next year, and policy direction. Feb. 5, 2014 Budget direction discussed and confirmed with Board of Directors. Jan. to March Staff develops proposed budget and Ten-Year CIP. April 9, 2014 Finance Committee makes recommendations. April 24, 2014 Long Term Planning Committee reviews Ten-Year CIP and makes recommendations. May 7, 2014 Board of Directors receives and discusses the Proposed Operating Budget for FY 2014/15 May 9, 2014 Mailing of Notices for Sewer Service Charge increase. May 21, 2014 Board of Directors receives and discusses the Ten-Year CIP for FY 2014/15 through FY 2023/24. June 4, 2014 Board of Directors adopts the FY 2014/15 Operating and Capital Budget and Ten-Year CIP. 28

29 Sources of Funds/Revenues The District has a stable revenue foundation, with 80% of the District s operating revenues (excluding grants and intergovernmental revenue and the use of fund equity) coming from sewer service charges collected as assessments on property tax bills. Other significant revenue sources include capacity charges, recycled water sales, waste hauler fees, land leases, and interest earnings. Sewer service charges (SSC s) are the fees charged to residences and businesses for sewer use. For most residences and businesses, these fees are paid annually as assessments on property tax bills. Some industrial and commercial customers are charged monthly, rather than annually, based either on water usage or actual sewer flows. Sewer service charges are a highly distributed revenue source for the District. The top ten sewer service customers represent only 9% of revenue from this category. This lack of concentration equates to a more stable revenue stream and is less susceptible to fluctuations in the economy or local business climate. Sewer service charges are subject to California s Proposition 218, which requires that increases to the fee be noticed to all property owners, with the opportunity to protest the increase through letters and statements at a public hearing. If there is a majority of the property owners in protest of the fee increase, the increase cannot proceed. increase annually by the Consumer Price Index for All Urban Consumers in the San Francisco/ Oakland/San Jose region. The fee is set to increase by CPI in FY 2014/15 and for the following fiscal year. For FY 2014/15, the annual fee will increase from $ to $ per Equivalent Dwelling Unit (EDU). Sewer Service Charges 5-Year History Charge per % Increase EDU FY 11 $ FY 12 $ % FY 13 $ % FY 14 $ % FY 15 $ % Sewer service charges revenue is forecasted for FY 2014/15 based on the actual number of EDUs (40,180), an additional 180 EDUs and the sewer service charge fee of $ per EDU. The total budgeted revenue is adjusted by a small percentage to account for delinquencies and non-payments. Millions $20 $18 $16 $14 SSC's FY11 FY12 FY13 FY14 FY15 The District followed the Proposition 218 process in 2011, providing the necessary notices and holding public hearings. At that time, the fee was set to Sources of Funds Total* = $55,656,770 Sewer Service Charges 34.1% * Excludes Transfers Fund Equity Used to Balance 18.1% Capacity Charges 7.1% 29 Other 0.7% Grants and intergovernmental revenues are those revenues that are paid to the District by another government, specifically for performing some specific task. In FY Grants and Intergovernmental 39.2% Recycled Water Sales 0.6% Wastehaulers Fees 0.4% 2014/15, the District will receive WaterSMART grant funding for construction of the continuation of the recycled water pipeline into the Milliken-Sarco- Tulocay (MST) Creeks area, and for construction of expansion of the recycled water facilities at the Soscol Water Recycling Facility. The District is also expecting to receive revenues from

30 the County of Napa and the Los Carneros Water District. These revenues are to reimburse the District for expenses related to the construction of the recycled water pipelines. Capacity charges, sometimes referred to as connection fees or impact fees, are fees paid by developers to pay for expanded capacity in the sewer collection and treatment systems to convey and treat wastewater. Capacity charges are forecasted for the next year based on the cost per EDU and an assumed growth rate of 450 EDU being developed during the fiscal year. This growth projection is higher than the average of the last three years and is based on the significant hotel projects currently in the planning phase being issued building permits in FY # of EDU FY11 FY12 FY13 FY14 FY15 In September 2010, the Board of Directors approved a phased-in increase to the capacity charges. Prior to that date, the fee had not increased since The capacity charge fee is scheduled to increase 5.1% to $8,723 on July 1, 2014, based on the construction inflation index for the San Francisco area. Capacity Charges Fee Schedule $5,660 per EDU Jan. 1, 2012 Increase to $6,000 per EDU July 1, 2012 Increase to $7,000 per EDU July 1, 2013 Increase to $8,300 per EDU July 1, 2014 Increase to $8,723 per EDU Every July 1 Increase by an inflation factor thereafter Recycled Water Sales are collected from customers who purchase recycled water from the District. Most recycled water is used for landscape irrigation. The demand for recycled water is almost exclusively during the May to October period. Recycled water sales are forecast to be 1,000 acrefeet (326 million gallons), which are based on historical use during a typical weather year, adjusted for increases or decreases in anticipated use or new users. For example, the anticipated use of water at Chardonnay Golf Course has decreased, as they have converted part of the golf course to vineyard use. The anticipated use is then multiplied by the cost to calculate projected revenue. The current cost is $0.98 per 1,000 gallons, with an increase anticipated in January 2015 based on an inflation factor. Rates will increase with CPI annually through In 2016, the rates will increase to $1.57 per 1,000 gallons in the peak demand period, with lower rates for off-peak use and for those customers that enter long-term contracts for significant water use. Recycled water sales are affected by the weather. Cooler, wetter spring and summer months result in less need to irrigate and therefore lower volumes of water are sold. Waste Hauler Fees are fees collected from private companies who have been permitted to collect septage from private residences and companies not connected to the District s sewerage works and dispose of that waste at the wastewater treatment plant. In FY 2012/13, the District started accepting Fats, Oil and Grease (FOG) waste generated at food service establishments. Thousands 1,100 1, $300 $200 $100 $0 Acre-Feet of Recycled Water FY11 FY12 FY13 FY14 FY15 Waste Hauler Fee Revenue FY11 FY12 FY13 FY14 FY15 Revenues are forecasted based on a three-year average of volume multiplied by the current fee for the specific type of waste. Fees increase at the same inflation factor used for sewer service charges. Forecast fee revenues for FY 2014/15 are flat for septage and FOG haulers, based on trends seen the past three years. 30

31 REVENUE - ALL SOURCES Actual Actual Budget Estimated Adopted Percent Account Description FY 11/12 FY 12/13 FY 13/14 FY 13/14 FY 14/15 Change 780-Operations Interest: Invested Funds 88, ,780 64,000 50,000 50,000 (21.9%) Rent - Building/Land 130,146 1,488, , , ,000 (16.7%) Construction/Bldg Permit Review 128,830 17,677 18,000 21,000 35, % Hauler Fees 160, , , , ,000 (1.7%) Sewer Usage Fees 17,400,473 17,965,150 18,351,100 18,400,000 18,963, % Penalties on Delinquent Sewer Fee 49,297 59,415 50,000 25,000 25,000 (50.0%) Recycled Water Sales 264, , , , , % Forfeitures and Penalties 30,718 14,191 14,000 4,000 4,000 (71.4%) Miscellaneous 191, ,225 25, ,000 50, % Total-Operations 18,444,872 20,604,859 19,174,850 19,910,650 19,789, % 781-Capital Improvement Projects Interest: Invested Funds 23,732 52, ,500 80,000 66,000 (43.8%) Federal Grants - USBR 1,103, , , ,000 5,236, % Other Government Agencies 696,085 1,559,321 4,400, ,000 16,573, % Bond Proceeds - 33,000, Sale of Capital Assets 14, ,900,000 20,000 - Interfund Transfers In Intrafund Transfers In 5,357,798 14,278,041 19,363,900 18,788,900 25,734, % Total-CIP 7,194,858 49,073,554 24,806,400 22,943,900 47,629, % 782-Expansion Interest: Invested Funds 1, (80.0%) Capacity Charges 1,425,486 1,516,677 2,075,000 1,500,000 3,925, % Total-Expansion 1,426,868 1,516,677 2,075,500 1,500,100 3,925, % Total-All Departments 27,066,599 71,195,090 46,056,750 44,354,650 71,344, % Land Leases generate revenue for the District. The District currently leases several parcels of land. The leases have inflation factors identified within them. The revenue forecast is set based on these contracts. In 2010, the largest of the land leases, the lease of the Somky Ranch to HCV Napa for development of a golf course, was rewritten. From 2010 through June 2013 the lease payments were deferred, awaiting the construction loan for the resort and golf facility, and were booked at the end of FY 12/13. The lease deferral has continued through FY 13/14 and is expected to continue through FY 14/15. The deferred lease payments will be paid all at once, including 4% compounded interest on the deferred payments, either at the time of construction or at the time the project is sold. The deferred payment for next fiscal year is not included in the revenue forecast. Interest Earnings is the revenue the District receives on idle cash and reserves that it maintains in its accounts. Cash is invested by the County of Napa Treasurer on the District s behalf and in accordance with state law, and posted to the District s funds quarterly. 31

32 For most of the past four years, the Federal Funds rate was between 0.00%-0.25%. This is the rate to which most allowable investments trend. These rates equate to an investment rate for the District of approximately 0.5%, depending on liquidity needs and the specific investments made. The financial markets do not expect the Federal Funds rate to increase until calendar year For FY 2014/15, the District has assumed an earnings rate of 0.5% for the entire year. The overall revenue this year is lower because of the bond proceeds being spent down. Thousands $300 $200 $100 $0 Grants and Intergovernmental Revenues are expected in support of specific recycled water capital projects. For the construction of the MST Recycled Water Pipeline, the District has been awarded a grant from the US Bureau of Reclamation (USBR), with the remaining cost of the project being paid for by Napa County through an SRF loan. The loan will be paid by through property taxes collected in a Community Facilities District. The District also expects to receive grant money from the USBR to support the expansion of recycled water capacity at the Soscol Recycled Water Facility. The District has Uses of Funds Total* = $55,656,770 Capital 66.5% Interest Earnings FY11 FY12 FY13 FY14 FY15 Salaries & Benefits 15.6% Chemicals 1.7% 32 also contracted with the Los Carneros Water District to manage the construction of approximately 9 miles of recycled water pipeline starting in FY 15. Uses of Funds/Expenditures The District expenses can be described in four major categories: salaries and benefits, services and supplies, capital expenses and debt service. Salaries and benefits are those expenses related to payroll and staffing. They include salary and wages of employees, overtime, payroll taxes such as Medicare, health insurance benefits, and retirement benefits. This category also includes expenses for funding the District s OPEB ( Other Post Employment Benefits ) liability. Current labor agreements expired June 30, 2014, and new agreements were not in place when the FY 14/15 budget was adopted. Absent new agreements, salaries for represented employees were estimated to increase 2.0% (what the COLA would have been if the contracts were extended). Individual salaries were also adjusted, with some employees moving up steps within their current classification, and vacancies budgeted at the bottom step. Overall, salaries are budgeted to increase 2.1% over prior year. Health benefits are known for the first two quarters in FY 2014/15. The budget assumes an 8% increase in employer costs for the last two quarters. Retirement benefits are budgeted based on a percentage of budgeted salary. That percentage is determined by CalPERS based on actuarial assumptions regarding retirement rates and investment earnings. For FY 2014/15, the retirement cost Electricity 1.5% Other Supplies & Services 6.2% Debt Service 8.5% budget decreased 5.1% from the prior year s budget, as the prior year budget erroneously counted all employees as part of the Tier 1 retirement plan. Payments in lieu of health benefits were budgeted to remained the same as prior year (although this could change in the new MOUs), with a slight decrease due to changes made by specific employees in insurance coverage.

33 EXPENSES - OPERATING AND CAPITAL Actual Actual Adj. Budget Estimated Proposed Percent Account Description FY 11/12 FY 12/13 FY 13/14 FY 13/14 14/15 Change Salaries & Benefits $7,289,778 $7,716,230 $8,437,640 $7,753,140 $8,656, % Services & Supplies 4,886,520 4,793,537 5,223,220 4,617,820 5,212,080 (0.2%) Capital Expenses 8,121,627 12,537,009 30,970,430 30,970,430 37,002, % Debt Service 2,563,475 3,043,356 4,775,240 4,773,360 4,751,800 (0.5%) Taxes & Assesments 23,638 24,185 25,050 24,036 33, % Transfers 5,357,798 47,278,041 19,363,900 18,788,900 25,734, % Total All Expenses $28,242,837 $75,392,358 $68,795,480 $66,927,686 $81,391, % Total w/o Transfers $22,885,039 $28,114,317 $49,431,580 $48,138,786 $55,656, % Workers compensation insurance costs are higher than prior year by 41.8%, due to an increase in the Experience Modification Rate from 0.66 to 0.84 and an increase to account for under budgeting in FY 2013/14. Overall, salaries and benefits increase 2.6% over the prior fiscal year. Services and supplies include the purchase of supplies and equipment to maintain and operate the various systems in the District. It also includes a number of service contracts and professional contracts. In the pie chart in this section, this category has been further broken down into chemicals and electricity, as these are the two largest supply expenses. Total supplies and services for FY 2014/15 are budgeted to be 0.2% lower than the prior fiscal year. This is due to the removal of one-time only projects that were budgeted in FY 2013/14, and significant savings in chemical expenses by converting one of the flocculating clarifiers to a Dissolved Air Floatation (DAF) clarifier. Capital expenses include expenses to build or acquire any capital asset, or to rehabilitate and extend the useful life of existing assets. Details of these expenses can be found in the Ten-Year Capital Improvement Plan (CIP), later in this budget document. Significant projects in the FY 2014/15 capital plan include the continuation of the IPS Replacement project, the Phase 1 Recycled Water Expansion project, and the MST Recycled Water Pipeline project, and shows the beginning of the Los 33 Carneros Water District Recycled Water Pipeline project. Debt service includes the principal and interest payments for all of the District s outstanding loans. Debt service is approximately $4.75 million and is anticipated to remain at that level for several years. More details on this new debt issuance can be found in the Debt section of this budget document. Transfers Out represent the following intrafund transfers: from Operations into the Capital Projects account ($1,887,500) from Expansion into the Capital Projects account ($3,847,000) from Debt Proceeds account into the Capital Projects account ($20,000,000) These intrafund transfers are between accounts that are segregated for accounting or legal purposes, and they have no positive or negative impact on the overall financial position of the District. Fund Equity Fund equity, for the basis of the District s budgeting and financial planning purposes, is defined as current assets including restricted assets, less current liabilities excluding capital-related liabilities. This number is meant to represent the amount of cash that the District has available to commit to operating or capital expenses now or in the future, and is comparable to Fund Balance in governmental-type funds. For FY 2014/15, the estimated Ending Fund Equity is 42% lower than the Beginning Fund Equity. This represents a decrease of almost $10.4 million, and is

34 the result of planned capital spending and the drawdown of debt proceeds during the year. To the extent that planned capital projects are not fully expended in FY 2013/14, the remaining project budget will be carried forward into FY 2014/15 through a budget amendment. Reserves In prior fiscal years, the District maintained three cash reserves. With the refinancing of its variable rate debt in 2012, one of those reserves is no longer required. The first reserve is an operating reserve designed to Financial Overview FY 11/12 FY 12/13 FY 13/14 FY 13/14 FY 14/15 Actuals Actuals Budget Estimate Proposed Beginning Fund Equity 20,385,825 19,162,339 46,516,757 46,516,757 23,943,700 Revenues Use of Money/Property 243,302 1,688, , , ,100 Charges for Services 19,514,832 20,166,153 20,961,200 20,476,000 23,472,700 Intergovernmental 1,799,168 1,892,183 5,325,000 1,175,000 21,809,000 Bond Proceeds 0 33,000, Miscellaneous Revenues 0 319,225 89,000 3,049,000 99,000 Total Revenues 21,557,302 57,066,369 26,692,850 25,565,750 45,609,800 Operating Expenditures Salaries and Benefits 6,502,898 7,033,573 8,437,640 7,753,140 8,656,840 Services and Supplies 4,904,729 4,793,505 5,223,220 4,617,820 5,212,080 Taxes and Assessments 23,638 24,185 25,050 24,036 33,150 Debt Service 2,563,475 3,043,356 4,775,240 4,773,360 4,751,800 Total Operating Expenditures 13,994,740 14,894,619 18,461,150 17,168,356 18,653,870 Capital Expenditures 8,121,627 12,537,009 30,970,430 30,970,430 37,002,900 GAAP Adjustments 664,420 2,280, Total Expenditures 22,780,788 29,711,951 49,431,580 48,138,786 55,656,770 Ending Fund Equity 19,162,339 46,516,757 23,778,027 23,943,721 13,896,730 15% Operating Reserve 1,908,000 1,980,000 2,056,000 2,056,000 2,085,000 Debt Service Liquidity Reserve 1,850,000 1,850, Operating Cash Flow Reserve 5,288,000 5,650,000 8,000,000 8,000,000 8,240,000 Total Reseves 9,046,000 9,480,000 10,056,000 10,056,000 10,325,000 Available for Use 10,116,339 37,036,757 13,722,027 13,887,721 3,571,730 (Fund Equity minus Reserves) The numbers above are net of transfers in and out. 34 assist the District during emergencies. This reserve is maintained at 15% of annual operating expenses, excluding debt service and transfers. The second reserve is an operating cash flow reserve. This reserve is the amount of cash necessary for the District to have on hand on July 1 to cover its anticipated expenses through the summer and fall until the District receives the bulk of its operating revenues (sewer services charges collected as property assessments) in December. The third reserve was a debt service liquidity reserve. The District was required as part of bond covenants on its Series 2009A variable rate debt to

35 maintain a debt service liquidity reserve of $3.7 million, measured twice a year on June 30 and December 31. This reserve ($1,885,000) was combined with the operating reserve to meet the debt service liquidity reserve. With the refinancing of this debt in 2012, the debt service liquidity reserve is longer required as part of bond covenants. The cash in this reserve was moved into the Operating Cash Flow Reserve, as this reserve needed to increase due to the new Series 2012A debt service payments being due on August 1 st. This award is valid for a period of one year only. District staff believes that this current FY 2014/15 budget continues to conform to program requirements and will be submitting it to GFOA to determine its eligibility for another award. GFOA Budget Award The Government Finance Officers Association of the United States and Canada (GFOA) presented the Distinguished Budget Presentation Award to Napa Sanitation District, California for its annual budget for the fiscal year beginning July 1, In order to receive this award, a governmental unit must publish a budget document that meets program criteria as a policy document, as an operations guide, as a financial plan, and as a communications device. 35

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37 Detailed Tables of Revenues and Operating Expenditures Recycled Water Pump Station Soscol Water Recycling Facility 37

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39 Napa Sanitation District FY 2014/15 Proposed Budget REVENUE - ALL SOURCES Actual Actual Budget Estimated Budget Percent Account Description FY 11/12 FY 12/13 FY 13/14 FY 13/14 FY 14/15 Change 780-Operations Interest: Invested Funds 88, ,780 64,000 50,000 50,000 (21.9%) Rent - Building/Land 130,146 1,488, , , ,000 (16.7%) Construction/Bldg Permit Review 128,830 17,677 18,000 21,000 35, % Hauler Fees 160, , , , ,000 (1.7%) Sewer Usage Fees 17,400,473 17,965,150 18,351,100 18,400,000 18,963, % Penalties on Delinquent Sewer Fees 49,297 59,415 50,000 25,000 25,000 (50.0%) Recycled Water Sales 264, , , , , % Forfeitures and Penalties 30,718 14,191 14,000 4,000 4,000 (71.4%) Miscellaneous 191, ,225 25, ,000 50, % Total-Operations 18,444,872 20,604,859 19,174,850 19,910,650 19,789, % 781-Capital Improvement Projects Interest: Invested Funds 23,732 52, ,500 80,000 66,000 (43.8%) Federal Grants - USBR 1,103, , , ,000 5,236, % Other Government Agencies 696,085 1,559,321 4,400, ,000 16,573, % Bond Proceeds - 33,000, Sale of Capital Assets 14, ,900,000 20,000 - Interfund Transfers In Intrafund Transfers In 5,357,798 14,278,041 19,363,900 18,788,900 25,734, % Total-CIP 7,194,858 49,073,554 24,806,400 22,943,900 47,629, % 782-Expansion Interest: Invested Funds 1, (80.0%) Capacity Charges 1,425,486 1,516,677 2,075,000 1,500,000 3,925, % Total-Expansion 1,426,868 1,516,677 2,075,500 1,500,100 3,925, % Total-All Departments 27,066,599 71,195,090 46,056,750 44,354,650 71,344, % Totals excluding intrafund transfers 21,708,800 56,917,049 26,692,850 25,565,750 45,609, % 39

40 Napa Sanitation District OPERATING EXPENDITURES - ALL ACCOUNTS Actual Actual Adj. Budget Estimated Proposed Percent Account Account Description FY 11/12 FY 12/13 FY 13/14 FY 13/14 14/15 Change Salaries and Wages 4,079,572 4,285,092 4,594,250 4,200,940 4,688, % Overtime 156, , , , , % Holiday Pay 5,981 5,760 8,820 6,750 7,450 (15.5%) Vacation Payout 3,622 33, , Cell Phone Allowance 2,040 3,870 3,600 3,600 3, % Director Pay 23,513 20,187 32,500 32,000 36, % Medicare 61,252 65,540 66,910 63,160 68, % F.I.C.A. / Social Security 832 1,252 2,000 1,500 1,680 (16.0%) Employee Insurance - Premiums 1,079,841 1,164,198 1,328,990 1,296,140 1,461, % Workers Compensation 62, ,888 73,650 80, , % Unemployment Compensation 11, Retirement 1,399,766 1,466,412 1,781,180 1,536,090 1,690,690 (5.1%) Other Post Employment Benefits 241, , , , , % Other Employee Benefits 161, , , , ,280 (5.1%) Subtotal Salaries & Benefits $7,289,778 $7,716,230 $8,437,640 $7,753,140 $8,656, % Accounting/Auditing Services 46,995 75,994 81,500 76,000 76,500 (6.1%) Information Technology Services 284, , , , , % Legal Services 127,211 80, , , , % Engineer Services - - 7,000 7,000 7, % Temporary/Contract Help 32,646 55,056 48,600 48,600 70, % Actuarial Services 3,600-5,000 5,000 6, % Medical/Laboratory Services 45,149 44,247 81,220 66,530 36,150 (55.5%) Training Services 16,148 10,573 17,100 16,120 13,000 (24.0%) Consulting Services 185,033 79, , , , % Waste Disposal Services 30,149 31,872 37,240 37,400 41, % Hazardous Waste Disposal Services 2,240 2,514 4,200 3,600 4, % Security Services 2,893 6,662 11,320 12,680 11, % Landscaping Services 6,660 11,570 18,040 7,800 8,400 (53.4%) Janitorial Services 65,775 55,440 57,180 56,910 58, % Other Professional Services 391, , , , ,500 (20.6%) Maintenance - Equipment 192, , , , ,950 (2.2%) Maintenance - Bldgs/Improvements 55,215 61,844 67,750 81,300 90, % Maintenance - Software 7,057 24,843 59,430 55,620 80, % Maintenance - Vehicles 71, ,360 65,750 75,290 87, % Rents and Leases - Equipment 72,157 59,674 63,000 69,390 67, % Rents and Leases - Buildings/Land 8,248 31,902 3, ,000 (68.3%) Insurance - Premiums 210, , , , ,000 (13.0%) Insurance - Claims - 6,999 20,000 5,000 15,000 (25.0%) Communications/Telephone 46,226 57,177 44,580 39,560 40,950 (8.1%) Advertising/Marketing 4,129 25,575 35,250 36,300 35, % Printing and Binding - 2,566 3,000 3,000 3, % Bank Charges ,500 1,200 1,200 (20.0%) Publications and Legal Notices 4,673 2,941 4,420 2,000 4, % Permits/License Fees 104, , , , , % Training/Conference Expenses 70,411 43,519 92,050 68,200 88,350 (4.0%) Business Travel/Mileage (Meetings) - 1,588 4,260 2,420 3,200 (24.9%) 40

41 Napa Sanitation District OPERATING EXPENDITURES - ALL ACCOUNTS Actual Actual Adj. Budget Estimated Proposed Percent Account Account Description FY 11/12 FY 12/13 FY 13/14 FY 13/14 14/15 Change Office Supplies 29,718 29,886 27,600 25,450 29, % Office Supplies - Furniture/Fixtures - 136,846 1,600 13, (81.3%) Freight/Postage 12,488 13,334 8,900 14,400 14, % Books/Media/Subscriptions 20,208 1,800 3,800 3,500 3,700 (2.6%) Memberships/Certifications 44,048 57,501 57,880 66,130 68, % Utilities - Gas 19,915 15,595 15,000 15,000 15, % Utilities - Electric 804, , , , , % Utilities - Fire Suppression Systems - 3,915 5, (86.2%) Utilities - Water 865 2, ,250 1, % Fuel 113, , , , , % Clothing and Personal Supplies 18,001 18,514 24,160 29,000 36, % Medical/Laboratory Supplies 61,942 66,202 57,500 57,850 60, % Safety Supplies 77,968 34,416 29,880 28,090 27,350 (8.5%) Janitorial Supplies 3,270 15,732 15,950 17,800 17, % Chemicals 1,006, ,385 1,164, , ,950 (20.7%) Maintenance Supplies 491, , , , , % Infrastructure Repair Supplies 9,250 11,511 8,700 11,500 9, % Minor Equipment/Small Tools 39,594 38,883 50,300 46,510 52, % Computer Equipment/Accessories - 15,072 6,410 4,270 - (100.0%) Computer Software/Licensing Fees ,800 6, (86.2%) Special Department Expense 23,218 22,467 19,850 13,550 31, % Service Awards 12,058 4,898 12,200 12,200 12, % Business Related Meals/Supplies 1,495 2,181 1, ,500 (9.1%) Wellness Reimbursement 8,435 7,602 9,700 8,580 9,650 (0.5%) Education Reimbursement Subtotal Services & Supplies $4,886,520 $4,793,537 $5,223,220 $4,617,820 $5,212,080 (0.2%) Principal on Bonds/COPs 1,481,919 1,534,290 2,341,730 2,341,730 2,614, % Interest on Bonds/COPs 946,831 1,509,066 2,425,910 2,425,830 2,130,000 (12.2%) Administration on Bonds/COPs 134,725 1,172,235 7,600 5,800 7, Taxes and Assessments 23,637 24,186 25,050 24,036 33, % Intrafund Expenditures 3,967,778 36,970,000 1,657,000 1,657,000 1,887, % Subtotal Other $6,554,890 $41,209,777 $6,457,290 $6,454,396 $6,672, % TOTALS $18,731,188 $53,719,544 $20,118,150 $18,825,356 $20,541, % 41

42 Napa Sanitation District OPERATING EXPENDITURES - BY MAJOR EXPENSE CATEGORY Actual Actual Adj. Budget Proposed Percent FY 11/12 FY 12/13 FY 13/14 14/15 Change Salaries & Benefits Board of Directors 25,019 22,241 35,500 38, % General Manager's Office 346, , , ,260 (1.8%) Administrative Services 1,069,165 1,108,425 1,160,300 1,196, % Safety, Training & Fleet Maintenance 139, , , , % Collection System 1,708,072 1,842,345 1,936,240 2,010, % Treatment Plant Operations 1,290,116 1,413,859 1,444,190 1,511, % Treatment Plant Maintenance 704, , , , % Treatment Plant Laboratory 575, , , , % Engineering 918, ,518 1,073,580 1,011,730 (5.8%) Pollution Prevention 14,273 15,472 17,660 18, % Water & Biosolids Reclamation 498, , , , % Non-Departmental Expenses Subtotal Salaries & Benefits $7,289,778 $7,716,230 $8,437,640 $8,656, % Services & Supplies Board of Directors 177, , , , % General Manager's Office 98,731 39, , , % Administrative Services 486, , , , % Safety, Training & Fleet Maintenance 69,730 65,650 73,120 75, % Collection System 437, , , , % Treatment Plant Operations 2,062,272 2,080,353 2,242,930 2,152,380 (4.0%) Treatment Plant Maintenance 695, , , ,000 (11.2%) Treatment Plant Laboratory 134, , , ,500 (23.2%) Engineering 114,835 70,315 78,795 94, % Pollution Prevention 73,803 72,475 72,770 84, % Water & Biosolids Reclamation 286, , , ,300 (1.3%) Non-Departmental Expenses 249, , , ,550 (8.2%) Subtotal Services & Supplies $4,886,520 $4,793,537 $5,223,220 $5,212,080 (0.2%) Other Administrative Services Treatment Plant Operations Water & Biosolids Reclamation 23,411 23,960 24,800 32, % Non-Departmental Expenses 6,531,253 41,185,591 6,432,240 6,639, % Subtotal Other $6,554,890 $41,209,777 $6,457,290 $6,672, % Total $18,731,188 $53,719,544 $20,118,150 $20,541, % 42

43 Napa Sanitation District OPERATING EXPENDITURES - BY DEPARTMENT Actual Actual Adj. Budget Proposed Percent Department Category FY 11/12 FY 12/13 FY 13/14 14/15 Change Board of Salaries & Benefits 25,019 22,241 35,500 38, % Directors Services & Supplies 177, , , , % Total 202, , , , % General Manager's Salaries & Benefits 346, , , ,260 (1.8%) Office Services & Supplies 98,731 39, , , % Total 445, , , , % Administrative Salaries & Benefits 1,069,165 1,108,425 1,160,300 1,196, % Services Services & Supplies 486, , , , % Other Total 1,555,258 1,571,964 1,704,300 1,741, % Safety, Training & Salaries & Benefits 139, , , , % Fleet Maintenance Services & Supplies 69,730 65,650 73,120 75, % Total 209, , , , % Collection Salaries & Benefits 1,708,072 1,842,345 1,936,240 2,010, % System Services & Supplies 437, , , , % Total 2,145,990 2,281,778 2,308,210 2,424, % Treatment Plant Salaries & Benefits 1,290,116 1,413,859 1,444,190 1,511, % Operations Services & Supplies 2,062,272 2,080,353 2,242,930 2,152,380 (4.0%) Other Total 3,352,577 3,494,402 3,687,320 3,664,370 (0.6%) Treatment Plant Salaries & Benefits 704, , , , % Maintenance Services & Supplies 695, , , ,000 (11.2%) Total 1,400,027 1,411,787 1,573,185 1,526,450 (6.0%) Treatment Plant Salaries & Benefits 575, , , , % Laboratory Services & Supplies 134, , , ,500 (23.2%) Total 709, , , ,390 (18.2%) Engineering Salaries & Benefits 918, ,518 1,073,580 1,011,730 (5.8%) Services & Supplies 114,835 70,315 78,795 94, % Total 1,033, ,833 1,152,375 1,106, % Pollution Salaries & Benefits 14,273 15,472 17,660 18, % Prevention Services & Supplies 73,803 72,475 72,770 84, % Total 88,077 87,947 90, , % Water & Biosolids Salaries & Benefits 498, , , , % Reclamation Services & Supplies 286, , , ,300 (1.3%) Other 23,411 23,960 24,800 32, % Total 808, , , , % Non-Departmental Services & Supplies 249, , , ,550 (8.2%) Expenses Other 6,531,253 41,185,591 6,432,240 6,639, % Total 6,780,562 41,576,897 6,686,540 6,872, % Total Operating Expenditures $18,731,188 $53,719,544 $20,118,150 $20,541, % 43

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45 Expenditure Budgets by Department Treatment Plant Operator cleaning the flocculating clarifier, Soscol Water Recycling Facility 45

46 Board of Directors Description The Board of Directors is the policy making body that determines the overall direction of the District and services provided to the customers. The rules for connecting and discharging to the system, and the rates and charges for services, are set by the Board. The Board of Directors comprises two directors who are members of the Napa City Council, one director who is a member of the Napa County Board of Supervisors, and two citizen appointees, one appointed by the city and one by the county. The Board of Directors hires the General Manager and contracts for the District Legal Counsel and the annual financial audit. Provide direction to staff on efforts to increase non-rate revenues and decrease the District s reliance on non-green energy sources. Changes from FY 2013/14 Service Levels The Board of Directors budget includes the District s expenses for legal services and audit services, as these functions report directly to the Board. There is no change in service levels from the prior fiscal year. The budget for consulting services was reduced to match recent historical usage and planned activities. The training and conference budget was increased to allow for attendance at the annual WateReuse California conference. The Board adopts the annual Operating Budget, Ten- Year Capital Improvement Plan, Ten-Year Financial Plan and sets the priorities for the District. Link to District Goals in Strategic Plan The Board of Directors establishes the Strategic Plan s long-term goals, objectives and priorities. Department Goals Goal: The Board of Directors Department goal is to articulate the short and long-term policy direction for the District to ensure: infrastructure reliability financial stability operational capability employee development community outreach and communication resource recovery Related Department Objectives Oversee the policy and strategic direction of the District and set levels of service for its customers. Participate in inter-agency communications and planning for delivering recycled water to the Milliken-Sarco-Tulocay (MST) creeks area. Work with senior management to update the District s Strategic Plan. Provide policy guidance regarding the impacts of wineries based on the 2009 Winery Study. Adopt, revise and monitor a long-term policy document for prioritizing the delivery of recycled water outside the current service areas. 46

47 Old Administration Building on Hartle Court New Administration Building at Treatment Plant Percent of Operating Budget Board of Directors 1.9% Proposed Budget Actual Actual Adj. Budget Estimated Proposed Percent FY 11/12 FY 12/13 FY 13/14 FY 13/14 FY 14/15 Change Salaries & Benefits $ 25,019 $ 22,241 $ 35,500 $ 34,350 $ 38, % Services & Supplies $ 177,532 $ 138,561 $ 224,910 $ 174,850 $ 227, % Other* TOTAL EXPENDITURES $ 202,551 $ 160,802 $ 260,410 $ 209,200 $ 266, % Position Authorizations Position Series FY 11/12 FY 12/13 FY 13/14 FY 14/15 Director-Member of Napa City Council (CC) Director-Member of Napa Board of Supervisors (BOS) Director-Public Representative Appointed by BOS Director-Public Representative Appointed by CC Totals

48 General Manager s Office Description The General Manager is responsible to the Board of Directors for all aspects of the administration, operation and planning activities of the staff of the District. The General Manager is the hiring authority for all positions. The General Manager s Office includes the General Manager position and the Assistant General Manager position. The General Manager is also the District Engineer. Link to District Goals in Strategic Plan The General Manager s Office is responsible to ensure that all of the departments and respective management are performing toward the District s established goals. As part of the Quarterly Report to the Board of Directors, the General Manager reports on the status of each District goal, objective, and the specific projects outlined in the Strategic Plan. The General Manager s Office is specifically responsible for conducting the study of plan check/inspection fees and capacity charge methodology (Goal Two: Financial Stability, Objective 2B), overseeing the next employee survey in Fall 2014 (Goal Four: Employee Development, Objective 4B), ensuring an adequate transition plan for the new administration building (Goal Four: Employee Development, Objective 4C), preparing for and completing the next labor negotiations (Goal Four: Employee Development, Objective 4E) and developing partnerships with stakeholders to achieve common goals (Goal Five: Community Outreach and Communications, Objective 5A). Department Goals Goal: Implement the policy direction of the Board of Directors. prevention standards, based on policy direction from the Board. Goal: Provide leadership and management throughout the District. Related Department Objectives Provide direction to all departments, aligning efforts to promote and be consistent with the District s goals and policy directives. Provide overall direction to the engineering staff regarding significant capital projects, including IPS replacement, Phase 1 Recycled Water expansion, and MST pipeline construction. Oversee the new employee survey, as identified in the Strategic Plan. Develop an Employee Master Plan to map out the personnel needs of the District over the next 10 years. Changes from FY 2013/14 Service Levels The budget includes a one-time expense in FY 14/15 of $15,000 to update the District s Strategic Plan. The budget includes a one-time expense of $40,000 for an Employee Master Plan. The Budget includes $15,000 to conduct the employee survey. The budget includes $30,000 for development of a Communications Plan. The budget includes $100,000 to study Industrial Waste Treatment Options, to look at the possibility of receiving trucked winery waste, as requested by the Board. The budget removed a one-time expense of $40,000 for a study and recommendation on the District s capacity fee structure and to make recommendations on plan review and inspection fees. Related Department Objectives Oversee the development of a Communications Plan for the District. Represent the District at the North Bay Water Reuse Authority, specifically working to bring federal money to the District for the MST Recycled Water Pipeline and the Phase 1 expansion of the recycled water filters. Oversee the update to the District s Strategic Plan in Spring Continue efforts to bring all wineries into compliance with pretreatment and pollution 48

49 District Open House event NSD booth at the annual Ag Expo in Napa Percent of Operating Budget Proposed Budget General Manager's Office 5.6% Actual Actual Adjusted Estimated Proposed Percent FY 11/12 FY 12/13 FY 13/14 FY 13/14 FY 14/15 Change Salaries & Benefits $ 346,523 $ 377,603 $ 619,500 $ 427,780 $ 608,260 (1.8%) Services & Supplies $ 98,731 $ 39,642 $ 104,520 $ 90,490 $ 264, % Other TOTAL EXPENDITURES $ 445,255 $ 417,245 $ 724,020 $ 518,270 $ 872, % Position Authorizations Position Series FY 11/12 FY 12/13 FY 13/14 FY 14/15 General Manager Assistant General Manager/District Engineer Totals

50 Administrative Services Description Administrative Services provides administrative and financial support for all other departments of the District. The division includes accounting, payroll, budget and financial planning, human resources and risk management. The division also includes duties in support of the Board of Directors, responding to public inquiries, records management, and general administrative support. Link to District Goals in Strategic Plan The Administrative Services Department supports the District s Goal Two: Financial Stability. This Department is responsible for developing nonrate, revenue-generating or expense minimizing ideas for the District (Objective 2A) and preparing and presenting policy options for financing the replacement of sewers (Objective 2C). This department will also be responsible for conducting a Sewer Service Charge fee study prior to the next Proposition 218 hearing (Objective 2D). The Administrative Services Department also supports Goal Four: Employee Development by taking the lead on developing and implementing management succession plans (Objective 4A) and creating an employee master plan (Objective 4D). Department Goals Goal: Provide financial information for managers and Board to maintain financial viability of the District. Revenue-to-Expense Ratio (positive number is goal) 09/10 10/11 11/12 12/13 13/14 14/ Debt Service Coverage Ratio (greater than 125% is required) 09/10 10/11 11/12 12/13 13/14 14/15 275% 328% 325% 231% 200% 200% Sewer Service Charge Bill Affordability (goal is to remain under 1.0% per EPA guidance) 09/10 10/11 11/12 12/13 13/14 14/ % 0.64% 0.64% 0.66% 0.65% 0.65% Related Department Objectives Review cash flow and emergency reserves for adequacy. 50 Complete the fifth year s Performance Measurement Report. Contract with CalPERS for actuarial services to implement GASB 68. Work with private sector partners to develop partnerships for green energy, lowering the District s electricity costs and providing non-rate revenues. Continue to provide financial support to managers, supervisors and staff, in support of District activities. Analyze assumptions in long-range plans for sensitivity to economic or regulatory change. Goal: Provide time sensitive and necessary Human Resources support throughout the District. Experience Turnover Rate (Lower is better) % 3.0% 5.7% 0.2% 5.0% 5.0% Employee Survey Results These are the percentage of employees who rated the following statement either positively or were neutral: The forms and process used for annual employee performance evaluations are user friendly % 89% na na 90% na Related Department Objectives Conduct an employee survey in Fall Develop an Employee Master Plan to determine proper staffing levels and classifications for current and planned operational requirements of the District Complete an update of the District s Employee Job Descriptions. Continue to provide human resource support to managers, supervisors and staff, in support of District activities. Goal: Provide general administrative support to employees and serve the requests of the general public. Related Department Objectives Continue to provide general administrative support to managers, supervisors and staff, in support of District activities.

51 Changes from FY 2013/14 Service Levels The budget includes savings in contracted accounting services due to the Purchasing Card program ($7,000). The FY 2014/15 budget for contracted Information Technology support increased due to increased number of PCs and other services ($46,650). The budget includes the expenses ($6,000) associated with compliance with GASB 68. The budget removes a one-time expense of sending the Director of Administrative Services/CFO to the Water/Wastewater Leadership Center. ($14,000) NSD Administrative Services staff Percent of Operating Budget Proposed Budget Administrative Services 12.5% Actual Actual Adjusted Estimated Proposed Percent FY 11/12 FY 12/13 FY 13/14 FY 13/14 FY 14/15 Change Salaries & Benefits $ 1,069,165 $ 1,108,425 $ 1,160,300 $ 1,104,340 $ 1,196, % Services & Supplies $ 486,058 $ 463,503 $ 543,950 $ 519,770 $ 544, % Other $ 36 $ 36 $ 50 $ 36 $ 50 - TOTAL EXPENDITURES $ 1,555,258 $ 1,571,964 $ 1,704,300 $ 1,624,146 $ 1,741, % Position Authorizations Position Series FY 11/12 FY 12/13 FY 13/14 FY 14/15 Director of Admin Services/Chief Financial Officer Clerk to the Board/Human Resources Officer Senior Accountant Accountant Management Analyst and Outreach Coordinator Administrative Assistant I/II Totals

52 Safety, Training and Fleet Maintenance Description Many of the District s activities are inherently dangerous, as they involve work in heavy traffic, repairs and installations of pipe in deep trenches susceptible to collapse, and entrance into confined spaces that potentially contain toxic gases or other hazardous conditions. This program oversees workplace safety and provides safety training for all staff to ensure safe working practices and compliance with safety regulations. This includes reviews of contractor safety programs to ensure that the District s contractors also work and operate safely. This program also includes maintenance and management of the District s fleet vehicles, communications management and general safety and security protocols. Link to District Goals in Strategic Plan This Department supports all of the goals of other departments by ensuring that the workplace is safe and employees are adequately trained. The Department specifically supports the District s Goal Three: Operational Capability by being responsible for preparing a safety and security vulnerabilities study and public communications plan (Objective 3A). Department Goals Goal: Implement programs that result in improved safety and lower accidents and incidents rates District s Experience Modification (XMOD) Rate (lower is better; NSD is compared to the CSRMA risk pool member average) 09/10 10/11 11/12 12/13 13/14 14/15 NSD Avg na na na Total Recordable Incidence Rate (Injuries and illnesses per 200,000 hours worked; NSD is compared to the wastewater industry average) NSD Avg na na na Number of Insurance Claims (number of claims per 200,000 hours of work) 09/10 10/11 11/12 12/13 13/14 14/ Severity of Insurance Claims (cost of claims per 200,000 hours of work) 09/10 10/11 11/12 12/13 13/14 14/15 $18k $12k $16k $33k $10k $10k Online Safety Training Hours Completed by Staff na 93.5% 91.6% 99.1% 99% 99% Related Department Objectives Develop and implement periodic review plan for District safety policies and programs. Amend current safety policies and programs to meet new requirements due to relocation of three departments. Prepare for and coordinate the safety review conducted by CSRMA, the District s workers compensation insurance carrier. Continue on five-year plan to implement fully the lockout-tagout Standard Operating Procedures (SOP) development and revision project, in conjunction with plant maintenance staff. Goal: Facilitate proper management of fleet vehicles to ensure they are safe and reach their intended useful lifespan Related Department Objectives Maintain and adjust ten-year plan for fleet sustainment, acquisition, rehabilitation and attrition. Determine right combination of mission essential vehicle types to ensure District operational effectiveness, while increasing efficiency and reducing overall cost. Oversee the District s Fleet Committee to determine proper general purpose fleet sizing to meet the goal of a common fleet approach; cross utilization of assets, increasing economy of force and reducing cost. 52

53 Changes from FY 2013/14 Service Levels The FY 2014/15 budget includes training for several district-wide classes that are required once every three years. Vehicle maintenance budget was reduced ($1,730) due to reduction in the general purpose fleet. Consolidated purchases of some safety supplies and PPE into this department ($4,500). District staff training on fire extinguisher use Percent of Operating Budget Proposed Budget Safety, Training & Fleet Maintenance 1.9% Actual Actual Adjusted Estimated Proposed Percent FY 11/12 FY 12/13 FY 13/14 FY 13/14 FY 14/15 Change Salaries & Benefits $ 139,936 $ 143,009 $ 171,310 $ 159,030 $ 184, % Services & Supplies $ 69,730 $ 65,650 $ 73,120 $ 74,160 $ 75, % Other TOTAL EXPENDITURES $ 209,666 $ 208,659 $ 244,430 $ 233,190 $ 260, % Position Authorizations Position Series FY 11/12 FY 12/13 FY 13/14 FY 14/15 Safety, Training & Fleet Maintenance Officer Totals

54 Collection System Description The purpose of the Collection System Department is to clean and maintain, inspect, repair, replace or rehabilitate sanitary sewer lines, manholes and other related facilities to assure the structural integrity of the District s sewer system in a manner that results in the most economical operation while maintaining regulatory compliance. Link to District Goals in Strategic Plan The Collection System Department supports the District s Goal One: Infrastructure Reliability by taking both preventive and corrective actions to maintain the infrastructure of the sewer system, and by assisting the Engineering staff in the design of capital projects. Specifically, the Department provides maintenance data and analysis in support of the wet weather inflow/infiltration analysis (Objective 1B). Department Goals Goal: To prevent sanitary sewer overflows (SSO s). Especially important is to prevent Category 1 overflows that are defined as an SSO that reached a drainage channel and/or surface water or; an SSO that reached a storm drain pipe that was not fully recovered and returned to the sanitary sewer system. Category 1 Sewer Overflows per 100 miles of pipeline (NSD compared to California average) NSD CA na na Category 1 Gallons of Spilled Sewage per 100 miles of pipeline (NSD compared to California average) NSD 2, CA 40,455 20,641 12,465 3,761 na na Goal: To provide quality customer service by responding to customer requests for service and being on site within 30 minutes of receiving the call. Average Number of Minutes to Respond na Related Department Objectives Continue to respond to the needs of the community in a timely and professional manner within 30 minutes, while trying to reduce the number of emergency service calls. Goal: To insure infrastructure stability by performing preventive maintenance on the Collection System. This includes inspection and cleaning of the sewer system. Sewer Main Condition Assessment (% of sewer mains video inspected) (Goal is 10% per year) % 10.3% 9.9% 7.4% 10% 10% Percent of Main Lines Cleaned (Goal is 40%) % 56.1% 45.8% 47.6% 40% 40% Planned Maintenance as Ratio of Total Maintenance (Goal is 90%) % 91.7% 90.4% 87.6% 90% 90% Number of Public Laterals Replaced or Rehabilitated (Goal is 60 per year) Related Department Objectives Maintain the sewer lateral preventive maintenance program at current service levels. Video inspect 10% of the sewer mains in the District s system Clean at least 40% of District sewer mains per year. Root foam 4 miles of sewer main, including related laterals and manholes, to reduce the root intrusion into these facilities. Work to eliminate higher maintenance sewer mains by replacing or repairing them. Replace or rehabilitate 60 public laterals. Move forward in gathering, storing and disseminating asset and work information in an economical way with completeness and accuracy, including sharing with other departments in the District and others as needed. Service Calls for District Plugged Laterals

55 Changes from FY 2013/14 Service Levels The FY 2014/15 budget adds $9,600 in garbage service related to the new Vactor dumpsite as part of the IPS capital project. Collection system workers excavate a sewer lateral to make repairs Percent of Operating Budget Proposed Budget Collection System 17.4% Actual Actual Adjusted Estimated Proposed Percent FY 11/12 FY 12/13 FY 13/14 FY 13/14 FY 14/15 Change Salaries & Benefits $ 1,708,072 $ 1,842,345 $ 1,936,240 $ 1,787,830 $ 2,010, % Services & Supplies $ 437,917 $ 439,433 $ 371,970 $ 393,510 $ 413, % Other TOTAL EXPENDITURES $ 2,145,990 $ 2,281,778 $ 2,308,210 $ 2,181,340 $ 2,424, % Position Authorizations Position Series FY 11/12 FY 12/13 FY 13/14 FY 14/15 Collection System Manager Collection System Supervisor Collection System Technician Collection System Worker III Collection System Worker IT/I/II Totals

56 Treatment Plant Operations Description The Treatment Plant Operations Department receives, treats and distributes wastewater and solids conveyed to the treatment plant in an environmentally sound and cost effective manner. This is done with a strong ethical foundation of protecting public health and the environment, while meeting our responsibilities to the rate payers. The department operates the plant, performs some basic preventive maintenance of plant equipment and structures, recommends improvements in plant process, assists with engineering and special studies, and prepares all regulatory reports applicable to the treatment plant. Link to District Goals in Strategic Plan The Treatment Plant Operations Department supports the District s Goal One: Infrastructure Reliability by providing support to the Engineering Department s work on implementing the Treatment Plant Master Plan critical projects (Objective 1A) and SCADA projects (Objective 1C). To support Goal Six: Resource Recovery, this Department will provide technical analysis when setting the targets for the percentage of electricity that is self-generated (Objective 6C) and will take the lead on determining strategies for the beneficial reuse of algae (Objective 6D). Department Goals Goal: Adhere to all federal, state and local guidelines, permits and regulations in the operation of the treatment plant. Treatment for BOD and TSS Removal (Must be higher than 85% - winter monthly average) BOD 97.7% 97.9% 97.3% 97.9% 97% 97% TSS 97.2% 96.9% 97.2% 97.2% 97% 97% Total Allowable BOD and TSS (Must be lower than 30 mg/l - winter monthly average) BOD TSS Related Department Objectives Continue producing an effluent that meets the NPDES permit requirements. Assist Engineering in the construction of the IPS expansion project. Goal: Effectively and efficiently operate the treatment plant. Polymer per MG processed Winter and Summer Wnt Smr Hypochlorite per MG processed Wnt Smr Percent Electricity Produced by Cogen Engine % 22.1% 23.3% 33.7% 38% 40% Electricity Consumed per Million Gallons Treated (Megawatt-hours per MG processed) Wnt Smr Related Department Objectives Continual process optimization of the plant control systems to achieve a reduction in chemical and energy costs, to match or exceed the targets noted in performance measures above. Continue installation of additional online instrumentation. Develop method for delivering fats, oil and grease (FOG) collected from siphon to the FOG receiving station. Continue to optimize production of biogas in digester resulting from FOG receiving program. Assist Engineering in the construction of the recycle water expansion project. Assist Engineering in the construction of the aerators and design of the automated dredge in Oxidation Pond 1. 56

57 Changes from FY 2013/14 Service Levels Replace a flocculating clarifier with a Dissolved Air Floatation clarifier, reducing chemical usage but increasing electricity usage, for a net savings of $115,000. Budget includes a one-time nutrient study as part of a regional response (BACWA) to Regional Water Board(RWQCB) requirements ($25,000). Budget includes $30,000 for a one-time project to digitize O&M manuals, reports and other documentation. Overseeing plant operations via SCADA interface Percent of Operating Budget Proposed Budget Treatment Plant Operations 26.4% Actual Actual Adjusted Estimated Proposed Percent FY 11/12 FY 12/13 FY 13/14 FY 13/14 FY 14/15 Change Salaries & Benefits $ 1,290,116 $ 1,413,859 $ 1,444,190 $ 1,391,850 $ 1,511, % Services & Supplies $ 2,062,272 $ 2,080,353 $ 2,242,930 $ 1,924,840 $ 2,152,380 (4.0%) Other $ 190 $ 190 $ 200 $ 200 $ TOTAL EXPENDITURES $ 3,352,577 $ 3,494,402 $ 3,687,320 $ 3,316,890 $ 3,664,370 (0.6%) Position Authorizations Position Series FY 11/12 FY 12/13 FY 13/14 FY 14/15 Plant Manager Operations Supervisor Operator OIT/I/II/III Totals

58 Treatment Plant Maintenance Description The Treatment Plant Maintenance Department provides corrective and preventive maintenance and equipment installation at the wastewater treatment plant and recycled water facilities, lift stations and other assigned areas. Priorities are set through consultation with Treatment Plant Operations staff to ensure plant reliability and permit compliance. Link to District Goals in Strategic Plan The Treatment Plant Maintenance Department supports the District s Goal One: Infrastructure Reliability by providing technical assistance on major plant infrastructure projects (Objective 1A) and SCADA upgrade (Objective 1C), and Goal Two: Financial Stability by performing planned and corrective maintenance on plant equipment. Department Goals Goal: Provide corrective and preventive maintenance safely, cost effectively and efficiently. Planned Maintenance Ratio of Hours Worked (Planned maintenance as a percentage of total maintenance measures the proactive nature of activity in the department and is more efficient than corrective or emergency maintenance. A higher percentage is better.) % 49.9% 63.7% 58.0% 63% 60% Goal: Maintain critical operational systems so that there is reliability and operational resiliency. Uptime for Cogeneration Engine (The Cogeneration Engine is critical for effective management of biogas through the generation of heat and electricity needed by the wastewater treatment plant to operate.) % 82% 84% 96% 95% 95% Uptime for Pumps at Influent Pump Station (The Influent Pump Station is the most critical pump station in the entire system.) % 67% 81% 77% 80% 100% Related Department Objectives: Continue enhancement and organization of the inventory system to reduce down time. Complete pump seal water delivery upgrades. Start four year CIP project to replace Rotork Actuators. Support the Engineering Department on the ongoing construction to replace the Influent Pump Station. Number of work orders completed ,791 1,409 1,191 1,372 1,400 1,500 Related Department Objectives: Expand equipment data base and associated task of Maintenance Program. Continue to implement an effective life cycle equipment replacement schedule for better budgetary expense projections. Expand the inventory of lock out devices for equipment in the control of hazardous energy. 58

59 Changes from FY 2013/14 Service Levels FY 2014/15 budget includes $25,000 to paint portions of the digester structure. FY 2014/15 budget includes $26,000 to service breakers and protective relays at major electrical stations. FY 2014/15 budget includes $22,750 for onetime floor coatings in chemical containment areas. FY 2014/15 budget includes $25,000 for increased valve replacements, to improve operational effectiveness and efficiency. Remove FY 2013/14 budget one-time only expense of $160,000 for marsh maintenance. NSD s cogeneration engine burns biogas from the digester to create heat and electricity Percent of Operating Budget Proposed Budget Treatment Plant Mainenance 11.0% Actual Actual Adjusted Estimated Proposed Percent FY 11/12 FY 12/13 FY 13/14 FY 13/14 FY 14/15 Change Salaries & Benefits $ 704,287 $ 754,554 $ 789,520 $ 760,520 $ 830, % Services & Supplies $ 695,740 $ 657,233 $ 783,665 $ 754,750 $ 696,000 (11.2%) Other TOTAL EXPENDITURES $ 1,400,027 $ 1,411,787 $ 1,573,185 $ 1,515,270 $ 1,526,450 (3.0%) Position Authorizations Position Series FY 11/12 FY 12/13 FY 13/14 FY 14/15 Plant Maintenance Supervisor Equipment Maintenance Specialist I/II Plant Attendant Totals

60 Treatment Plant Laboratory Description The Treatment Plant Laboratory provides support to Plant Operations with consistently high quality analytical laboratory services. Laboratory analyses fall into one of three categories: 1) Required for regulatory compliance within District s operating permits; 2) Needed for operational control of the complex treatment processes; or 3) Requested by staff or contracted consultants in support of special studies. Related Department Objectives Implement the third party s audit findings of the Napa Sanitation District Laboratory s Quality Assurance Program, SOP s and Analyst training program. Review and update operational data sampling and analysis management for an efficient process control operational strategy. Continue to produce high quality analytical data for real-time operational changes. Continue to incorporate pretreatment sampling/analysis events to provide pretreatment regulatory compliance for the District. Develop and implement an analyst educational outreach training program. Link to District Goals in Strategic Plan The Treatment Plant Laboratory Department supports the District s goals in the Strategic Plan through its support of the Plant Operations, Plant Maintenance, and Engineering Departments, and the Pollution Prevention Program. There are no specific objectives in the Strategic Plan that this department is responsible for completing. Department Goals Goal: Provide laboratory services efficiently and reliably, while abiding by the protocols and policies of the Quality Assurance Manual, Standard Operating Procedures and laboratory safety program. Number of regulatory analyses processed ,961 3,828 4,498 4,644 5,500 4,700 Number of Process Control analyses processed ,081 15,888 11,522 14,155 15,000 15,000 Number of special request analyses processed , , Number of Quality Control/Assurance analyses processed , (a) 1,422 4,355 5,500 4,500 (a) New LIMS system does not quantify QA/QC conducted on process/regulatory samples. QA/QC analyses is based on required Laboratory QAQC analyses for Laboratory ELAP certification. 60

61 Changes from FY 2014/15 Service Levels FY 2014/15 budget decreased by $32,000 for chronic toxicity screening which was completed in FY 2013/2014, which is required once every 5 years as part of NPDES permit compliance. FY 2014/15 budget increased $4,500 for onetime training in SQL and Crystal Reports for LIMS reporting. Budget decreased from FY 2013/14 by removing the one-time expense of the ELAP audit. NSD Lab Technicians run thousands of regulatory and process control analyses annually Percent of Operating Budget Proposed Budget Treatment Plant Laboratory 5.8% Actual Actual Adjusted Estimated Proposed Percent FY 11/12 FY 12/13 FY 13/14 FY 13/14 FY 14/15 Change Salaries & Benefits $ 575,601 $ 609,314 $ 627,950 $ 609,800 $ 658, % Services & Supplies $ 134,174 $ 144,713 $ 189,330 $ 173,370 $ 145,500 (23.2%) Other TOTAL EXPENDITURES $ 709,775 $ 754,027 $ 817,280 $ 783,170 $ 804,390 (1.6%) Position Authorizations Position Series FY 11/12 FY 12/13 FY 13/14 FY 14/15 Lab Supervisor Lab Technician I/II Totals

62 Engineering Description Engineering provides technical assistance to the operational departments within the District. The group is responsible for managing most of the District s capital projects and prepares project charters for projects that are included in the District s Ten-Year Capital Improvement Plan. Engineering is responsible for reviewing development plans for conformance with District standards and inspection of sanitary sewer facilities. In some cases, the group prepares the design plans and specifications and provides construction management and inspection for collection system projects. Link to District Goals in Strategic Plan The Engineering Department supports the District s Goal One: Infrastructure Reliability and Goal Six: Resource Recovery by providing project management and leadership on all of the infrastructure projects identified: Treatment Plant Master Plan projects, such as pond aeration, recycled water equalization and filters, and influent pump station (Objective 1A) Conduct wet weather inflow/infiltration cost/benefit analysis (Objective 1B) SCADA project implementation (Objective 1C) Build new administration building and corporation yard (Objective 1B) Working with local partners in the distribution of recycled water (Objective 6A) Studying the feasibility of expanding recycled water storage (Objective 6B) Setting a target for self-generated energy production (Objective 6C) Department Goals Goal: Plan and implement the Ten-Year Capital Improvement Plan. Percent of Annual Capital Plan Expended 09/10 10/11 11/12 12/13 13/14 14/ % 52.6% 67.5% 63.8% 48.8% 75% Capital Expenses as Percent of Operating Expenses % 64% 71% 106% 155% 95% Related Department Objectives Initiate capital projects that are scheduled to begin within the fiscal year and finalize those projects that are scheduled to be completed within the fiscal year. Develop and utilize capital program management system to monitor and report progress of active capital projects. Begin the construction of the MST Recycled Water Pipeline. Goal: Plan projects to ensure that the renewal or replacement of existing assets is completed according to condition assessments and estimated useful lives of assets. Renewal & Replacement of Assets (as a % of asset net worth 2% minimum, 4% goal) % 2.8% 3.0% 2.6% 3.0% 4.0% Related Department Objectives Plan for and complete renewal & replacement capital projects that impact at least 2% and up to 4% of the District s assets annually. Initiate in-house design of Basin L Rehabilitation Project 4. Complete construction management of the Basin L Rehabilitation Project. Complete construction of the IPS Replacement project. Goal: Complete the first review of development plans submitted for District approval within 30 calendar days. Development Review Response Time (% of applications where 30-day goal is met) % 95% 97% 96% 95% 95% Number of development plans reviewed Number of construction inspections ,043 1,200 1,200 62

63 Related Department Objectives Review and return development plans within 30 days of submittal to District. Respond to requests for information from the general public and other local agencies within three working days of request. Responded to an estimated 270 phone requests and 260 counter requests for development related information. Conduct an estimated 800 activities related to construction inspection of NSD collection system facilities, include locating sewers, permit processing, preconstruction meetings, inspections, and updating record drawings. District engineers review development plans for conformance to standard specifications Changes from FY 2013/14 Service Levels FY 2014/15 budget includes $20,000 for temporary CAD/project design support related to sewer replacement & rehabilitation projects. FY 2014/15 budget adds $15,000 to modify Track-It software reporting and permit writing based on District operations and ordinance. FY 2014/15 budget removes $25,000 for an Engineering Services Fee Study that was completed in prior year. Percent of Operating Budget Proposed Budget Engineering 8.0% Actual Actual Adjusted Estimated Proposed Percent FY 11/12 FY 12/13 FY 13/14 FY 13/14 FY 14/15 Change Salaries & Benefits $ 918,358 $ 892,518 $ 1,073,580 $ 921,740 $ 1,011,730 (5.8%) Services & Supplies $ 114,835 $ 70,315 $ 78,795 $ 35,330 $ 94, % Other TOTAL EXPENDITURES $ 1,033,193 $ 962,833 $ 1,152,375 $ 957,070 $ 1,106,230 (4.0%) Position Authorizations Position Series FY 11/12 FY 12/13 FY 13/14 FY 14/15 Senior Civil Engineer Junior/Assistant/Associate Engineer District Inspector I/II Senior Construction Inspector Construction Inspector Totals

64 Pollution Prevention Description The Pollution Prevention Program is a crossdepartmental program designed to ensure that discharges to the collection system and treatment plant are in compliance with the District s Sewer Use Ordinance and will not pose a hazard to the public, District employees or District facilities and treatment processes. The District's Pretreatment Program controls the amount of pollutants that are discharged to the sanitary sewer system through active regulation of numerous industrial and commercial businesses in Napa. Program activities include periodic on-site inspections, permit writing and administration, sampling of various discharges, and enforcement when necessary. The Program supports increased water recycling and reuse, as well as wastewater treatment prior to discharge to the sanitary sewer to reduce pollutant loadings to the treatment facility. The Pollution Prevention Program also supports education and outreach through school programs, community events and treatment plant tours. Link to District Goals in Strategic Plan This program supports the Strategic Plan, specifically Goal Three: Operational Capability in the development of policy and programs regarding the impact of wineries on the NSD system (Objective 3B) and Goal Five: Community Outreach and Communication in the development of a communications plan to address NSD outreach and public information needs (Objective 5B). Program Goals Goal: Decrease Fats, Oil and Grease (FOG) deposited in the Collection System, thus reducing maintenance expenses and reducing the risk of Sanitary Sewer Overflows (SSOs). Restaurant Inspections (Fats, Oil & Grease) (goal is every food service establishment annually-178) Main Line Sanitary Sewer Overflows Due to FOG (goal is zero) Related Department Objectives With the City of Napa, promote the Recycle More Program which provides curbside collection of used cooking oil. Continue to develop and refine the inspection program for Fats, Oil and Grease (FOG). Continue public outreach on proper disposal of FOG. Goal: Prevent pollutants from being discharged into the sewer system through active regulation, promotion of Best Management Practices, and outreach to the public. Plant Tours Conducted and Presentations Made Pounds of Unwanted Pharmaceuticals Diverted ,368 2,577 3,464 3,500 3,500 Related Department Objectives Expand the medication collection program to include more drop-off sites. Conduct plant tours and make public presentations. Develop and disseminate to stakeholders pollution prevention BMPs as necessary Promote classroom presentations targeting elementary school students. Develop Spanish language outreach for pollution prevention messages. Develop a wastewater treatment plant video for use online, in classrooms, and for community organizations. Develop performance goals for increased and improved inspection of non-categorical dischargers. Continue monitoring, sampling, reporting, and billing for all categorical dischargers. Lateral Overflows or Backups Due to FOG (goal is zero)

65 Changes from FY 2013/14 Service Levels FY 2014/15 budget includes support for Spanish language translation and outreach/education services ($8,500) FY 2014/15 budget includes support to produce a wastewater treatment video for use in classrooms and on website ($7,000) Last year s budget included one-time support to expand the pharmaceutical take back program that are not needed in the current year. School tour of the Treatment Plant Headworks Percent of Operating Budget Proposed Budget Pollution Prevention 0.7% Actual Actual Adjusted Estimated Proposed Percent FY 11/12 FY 12/13 FY 13/14 FY 13/14 FY 14/15 Change Salaries & Benefits $ 14,273 $ 15,472 $ 17,660 $ 17,110 $ 18, % Services & Supplies $ 73,803 $ 72,475 $ 72,770 $ 62,720 $ 84, % Other TOTAL EXPENDITURES $ 88,077 $ 87,947 $ 90,430 $ 79,830 $ 103, % Positions in All Departments Allocated to Pollution Prevention Activities Position Series FY 11/12 FY 12/13 FY 13/14 FY 14/15 Plant Lab - Laboratory Supervisor Administration - Mgmt Analyst & Outreach Coord Engineering - Inspector Engineering - Engineer Pollution Prevention - PP/SCO Steering Committee Plant Operations - Plant Manager Engineering - Senior Civil Engineer Administration - Director of Admin Services/CFO Totals

66 Water & Biosolids Reclamation Description This department is responsible for the effective and efficient distribution of recycled water and management of biosolids in a manner that respects the environment, maintains public health and conforms to local, state and federal regulations. After the treatment of wastewater, the District generates recycled water known as Title 22 Unrestricted Use which is permitted under State of California Regulations for almost any use except potable (drinking water) reuse. The District delivers this water to vineyards, golf courses, cemeteries, parks and athletic fields, and for landscape irrigation purposes. Biosolids are managed by this department through land application. This method avoids expensive offsite hauling and disposal of biosolids, with significant savings to the ratepayers. Link to District Goals in Strategic Plan The Water & Biosolids Reclamation Department supports the District s Goal Six: Resource Recovery through its support of local partners and the Engineering Department s projects to construct distribution systems for recycled water (Objective 6A) and providing technical assistance regarding expanding storage for recycled water (Objective 6B). Distribute up to 650 million gallons (2,000 acre feet) recycled water, with 65% sold to customers. Complete annual recycled water user site inspections, issuing no Notice of Noncompliance. Complete an update to the Program portion of the Reuse Manual. Continue the Jameson Reuse Site sprinkler rehabilitation project, to increase the efficiency of recycled water application. Complete activities necessary to achieve Fish Friendly Certification at Fegundes Ranch, with certification anticipated in FY 2014/15. Goal: Dispose of 100% of biosolids through land application on District-owned property. Biosolids Put to Beneficial Reuse (% of biosolids applied to seeded & harvested acres) % 90% 100% 100% 100% 100% Related Department Objectives Apply approximately 1,200 dry tons of dewatered biosolids on District land. Put 100% of the biosolids applied to District land to beneficial reuse, through active agricultural practices on the land (growing crops, grazing sheep). Department Goals Goal: Dispose of recycled water during the summer months through sales to customers and on Districtowned property. Recycled Water Service Availability (% of time RW is available to customers May to Oct.) % 97.8% 100% 100% 100% 100% Recycled Water Reuse by Customers (% of recycled water sold to customers May to Oct.) % 56.5% 62.3% 71.5% 65% 65% Related Department Objectives Maintain Recycled Water availability at 100% during the non-discharge period. 66

67 Changes from FY 2013/14 Service Levels In the FY 2014/15 budget there are no changes in service levels in this department. Irrigating Somky Ranch with recycled water Applying biosolids at Jameson Ranch Percent of Operating Budget Proposed Budget Water & Biosolids Reclamation 6.5% Actual Actual Adjusted Estimated Proposed Percent FY 11/12 FY 12/13 FY 13/14 FY 13/14 FY 14/15 Change Salaries & Benefits $ 498,427 $ 536,890 $ 561,890 $ 538,790 $ 585, % Services & Supplies $ 286,420 $ 230,353 $ 282,960 $ 163,730 $ 279,300 (1.3%) Other $ 23,411 $ 23,960 $ 24,800 $ 23,800 $ 32, % TOTAL EXPENDITURES $ 808,259 $ 791,203 $ 869,650 $ 726,320 $ 898, % Position Authorizations Position Series FY 11/12 FY 12/13 FY 13/14 FY 14/15 Reclamation Systems Director Reclamation Maintenance Worker I/II Plant Attendant Totals

68 Non-Departmental Expenses Description These expenses are not directly attributable to a specific department or program. They include expenses that are allocated at the District level, such as District memberships in organizations and associations, liability insurance, refunds of sewer service charges, debt service payments, and interfund transfers. Changes from FY 2014/15 Service Levels There were no changes from FY 2013/14 service levels related to insurance. Premiums were reduced based on loss experience ($30,000). Budget includes new memberships, including WateReuse Association ($2,300), California Product Stewardship Council ($2,000), and Baywork ($700). Treatment plant biogas holder (left) and digester (right) Percent of Operating Budget Non- Departmental 1.9% Proposed Budget Actual Actual Adjusted Estimated Proposed Percent FY 11/12 FY 12/13 FY 13/14 FY 13/14 FY 14/15 Change Salaries & Benefits Services & Supplies $ 249,308 $ 391,306 $ 254,300 $ 250,300 $ 233,550 (8.2%) TOTAL OPERATING EXPENDITURES $ 249,308 $ 391,306 $ 254,300 $ 250,300 $ 233,550 (8.2%) Debt Service, Transfers and Taxes $ 6,531,253 $ 41,185,591 $ 6,432,240 $ 6,430,360 $ 6,639, % TOTAL EXPENDITURES $ 6,780,562 $ 6,686,540 $ 6,680,660 $ 6,872, % 68

69 Capital Improvement Plan Construction during Lower Alphabet Street Sewer Improvement project 69

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71 Capital Improvement Plan Program Description The Capital Improvement Plan (CIP) is designed to identify capital expenditures for the next ten years and to plan appropriately for how to complete those projects within projected revenues and staffing capacity. The plan includes the replacement and rehabilitation of existing capital assets as well as the acquisition or construction of new capital assets. Definition of Capital Expenditures Capital expenditures, or capital outlays, are cash outlays by the District that result in the acquisition or construction of a capital asset. A capital asset is any asset of significant value (over $5,000) that has a useful life of over one year. Examples include land, buildings, machinery, vehicles and equipment. All capital assets acquired or constructed are included in the Capital Improvement Plan. Land is always considered a capital asset, regardless of value. Capital Plan Development Process Annually, the District updates its Ten-Year Capital Improvement Plan. The plan undergoes several levels of review and alteration. First, a project is individually evaluated to determine whether it is necessary to do the project, or if a less expensive alternative is available. If the project is still the best alternative, then an evaluation is done to determine when the project should be done, based on the condition of the existing assets or the operational and maintenance needs for the project. Management and supervisory staff also are provided an opportunity to identify new capital projects through the Project Charter process. New projects are proposed to the Capital Program Manager and the District Engineer who evaluate the projects and determine their need and level of priority. Once vetted through this process, new projects are added to the CIP as funding allows. Vehicle Replacement Guidelines The District maintains a fleet of vehicles used solely for purposes related to the direct maintenance and operations of the District. When a vehicle is purchased, it is identified at that time how long that vehicle should continue to serve its intended function, provided that the vehicle is maintained properly. The replacement of that vehicle is then scheduled in the Capital Improvement Plan, to 71 ensure that the District has adequately planned for the replacement costs associated with the vehicle. Every year, a team of District staff reviews the list of vehicles owned by the District and the replacement schedule. The team makes the following recommendations: Move vehicles back or forward on the replacement schedule based on the maintenance history of the vehicle and any current maintenance problems; Move vehicles back or forward on the schedule based on regulatory requirements (such as CARB requirements for diesel engines); Move vehicles between organizational units when the use of the vehicle changes; Identify whether a vehicle scheduled for replacement should be recommended for surplus, or when it could still be used effectively by another department; and Identify when service needs have changed that could necessitate that a vehicle be replaced by a different type of vehicle or not at all. Senior management reviews the recommendations of the Fleet Team, accepts or rejects recommendations, and incorporates accepted changes into the Ten-Year Capital Improvement Plan. All decisions to declare a vehicle surplus and replace the vehicle are brought to the NSD Board of Directors for approval, in accordance with District procurement policy. The replacement of fleet vehicles represents 2.9% of the entire Ten-Year Capital Improvement Plan. All revenues collected from the sale of any vehicles declared surplus is used to offset the cost of new vehicles. The Dystor cover, which serves as the biogas holder, was replaced in FY 2013/14 due to a rip in the inner membrane.

72 Sources of Capital Expenditure Funding There are several sources of funding for capital projects. The District collects capacity charges on new development to pay for its share of expanding the collection and treatment systems. The District also collects sewer service charges revenue in excess of operational needs to pay for replacement and rehabilitation projects. The fees collected as part of development plan review are used for capital projects, as well as grant and intergovernmental revenue. Use of Capacity Charges for Expansion The District imposes a capacity charge on new development (see the Budget Summary section, page 30, for more information on this revenue source). In August 2009, the District completed a study of capacity charges. The study determined that from FY 1995/96 to FY 2007/08, there was significantly more money spent to provide new capacity (expansion) than there was capacity charge revenue collected. As of July 1, 2008, the expansion fund (capacity charges) was in deficit to existing ratepayers and the capital projects fund by $12.6 million. As new projects are completed, their benefit to existing users and to new development is evaluated, and a split of expenses between the two is assigned. At the end of the fiscal year, the deficit is adjusted based on the amount of revenue received in capacity charges and the amount of capital expenditure for expansion projects. The following represents a summary of this accounting: FY 2008/09 Actual Beginning Deficit (7/1/08) ($12,607,167) Revenues 1,387,193 Expansion Projects 1,663,801 FY 2009/10 Actual Beginning Deficit ($12,883,775) Revenues 600,664 Expansion Projects 2,191,370 FY 2010/11 Actual Beginning Deficit ($14,474,480) Revenues 2,183,802 Expansion Projects 2,811, FY 2011/12 Actual Beginning Deficit ($15,101,839) Revenues 3,330,418 Expansion Projects 4,208,445 FY 2012/13 Actual Beginning Deficit ($15,979,866) Revenues 2,693,047 Expansion Projects 2,171,064 FY 2013/14 Estimated Beginning Deficit ($15,457,883) Revenues 2,675,000 Expansion Projects 10,700,000 Beginning Deficit ($23,482,883) Revenues 3,925,000 Expansion Projects 8,825,689 Ending Deficit (28,383,572) A budget deficit and situation where expenses on expansion projects exceeds revenues means that the current ratepayers in the system are paying more than their allocated share of capital expenses, as the deficit is made up using sewer service charges and other revenues from operational sources. A copy of the Capacity Charges Report for Fiscal Year 2012/13 can be found in Appendix F of this budget document. Changes from Prior CIP During the 2013/14 fiscal year, the Ten-Year CIP was amended by the Board of Directors. The following is a summary of the major changes made to the plan during the year: Adjusted the funding for the Basin L I&I projects, with $502,030 added to Project 3 and $415,600 in Project 4 moved out to FY 2014/15. Moved the North Napa 18 ACP & Soscol Ave 14 ACP sewer main rehabilitation project forward in the CIP to begin in FY 2013/14 ($145,600). Moved the Pond Dredge (CIP #13745) back to start in FY 2015/16 ($575,605). Increase the budget for the Spare Chemical Pump (CIP #13721) by $30,000. Increased the budget for the Solids Handling Improvements (CIP #14707) by $11,700. Removed or delayed the replacement of several equipment items in the Plant, including the AB Caustic Equipment Building

73 Replacement ($15,000), DO Probe Replacements ($5,000), and four samplers in the Lab ($23,600). Moved forward in the CIP the replacement of the balance in the Lab (CIP #14731, $15,000) and the TWAS pump replacement in the Plant (CIP #14732, $40,000). Moved the replacement of the Dystor Day Tank Gas Holder Membrane (CIP #14734) to FY 13/14 because of a significant tear ($400,000) Increased the budget available for the Recycled pump station split of the North/South lines (CIP #14727) by $34,200. Eliminate the replacement of Vehicle #605 ($26,000). Summary of FY 2014/15 Capital Projects The following is a summary of FY 2014/15 capital projects. Dollar amounts noted are the amount budgeted for FY 2014/15, and not the entire amount of the project. For complete financial information, see the table of projects that follows, starting on page 81. Vehicles District vehicles are all purchased and owned by the District. Each vehicle is placed on the Ten-Year CIP so that their replacement can be planned. Vehicles are not replaced unless necessary. Vehicles at the end of their useful life are declared surplus property by the Board of Directors and sold at auction. Total vehicle replacement costs for FY 2014/15 is $73,900. This number is included in the amounts provided in the following descriptions by type. Collection System Collection System projects represent routine replacement or rehabilitation of existing pipeline or equipment. These projects are designed to replace or improve assets to extend their useful lives or to improve their function by reducing how rainwater and groundwater can enter the collection system. Major projects beginning this year include Post /Evans (Silverado Trail to Juarez) sewer replacement project, an upper lateral rehabilitation pilot project in Basin L, the Sarco Creek sewer relocation project (paid for by Caltrans), a siphon rehabilitation project, and the fourth I&I Project in Basin L just south of downtown Napa. Collection system projects for the fiscal year total $5,557,200. Stonecrest Lift Station Collection System Equipment The Collection Department will be replacing a truck and its CIPP trailer in FY 2014/15. Total replacement cost is $43,900. Lift Stations Lift stations are pump stations within the sewer collection system. There are no lift station projects in FY2014/15. Treatment FY 2014/15 includes the completion of the Recycled Water Phase 1 Expansion Project, to increase the production of recycled water from about 2,000 acre-feet per year to 3,700 acre-feet ($6,920,500). Treatment Equipment These projects include a number of equipment replacements, such as the rebuilding of secondary pump station pumps ($35,000), replacement of DAFT overflow pumps ($10,000), solids handling improvements ($120,000) and turbidmeters ($11,000). The plan includes the installation of an effluent overflow meter ($120,000), and continues a multi-year program to replace the Rotork actuators throughout the plant ($82,400). The total FY 2014/15 expenditure is $468,400, including vehicles. Treatment Plant Structures Included here is the final year of the four-year project to design and construct a replacement for the Influent Pump Station ($7,802,900), and pond improvements ($50,000). SCADA SCADA is the hardware and software that is used to operate the treatment plant. In FY 2014/15, SCADA PLCs will be replaced ($38,000) along with two computer servers ($16,000 each). 73

74 Recycling-District This section includes projects and equipment necessary for the District to maintain its fields, conduct spray disposal of water, and land apply biosolids. FY 2014/15 includes the installation of an isolation valve on the Kirkland line ($15,000). Recycling-Expansion This section includes projects to expand the recycled water distribution system into the community. Expenses here include continued efforts through the North Bay Water Reuse Project to apply for and manage federal and state grants ($500,000), the construction of the recycled water distribution pipeline into the MST area ($7,000,000) and an associated project to split off the south distribution lines from the north lines to better manage pressure needs once the MST project is complete ($318,000). This section also includes the beginning of construction of the Los Carneros Water District recycled water pipeline ($8,000,000). Other Development technical support ($214,000) is the capitalization of staff time spent reviewing the plans and inspections associated with contributed capital. Ten-Year CIP Summary FY 2014/15 10-Year CIP Collection System $5,557,200 $46,469,700 Collection System Equipment 43,900 3,337,250 Lift Stations 0 455,000 Treatment 6,290,500 14,918,005 Treatment Equipment 468,400 4,479,700 Treatment Structures 7,852,900 26,165,500 SCADA 70,000 1,105,800 Recycling-District 15,000 7,306,500 Recycling-Expansion 15,861,000 70,777,800 Other 214,000 2,668,500 Total $37,002,900 $177,683,755 ensure that there are adequate resources to pay for these projects once they are known. There are also projects that have been identified in master plan documents that have not been included in the CIP. Because there are insufficient resources to pay for all recommended projects, staff has determined that the following projects could be delayed until some future date when resources are identified to complete them. It is also staff s determination that delaying these projects will not result in a deferred maintenance scenario, nor will the delay pose an unreasonable risk for system failure or permit violation: The District completed an Energy Alternatives Study that looked for ways the District could generate its own electricity, including solar and wind sources. It was determined that the Return on Investment for projects in the study, such as wind and solar energy production, is not sufficient to justify them at this time, so they have not been included in the CIP. Staff will continue to monitor rebates and equipment costs. A future project will be recommended if cost effective. Demolition of North Napa Pump Station and Force Main The North Napa Pump Station and Force Main were decommissioned after the siphon was installed under the Napa River. The pump station and force main were left intact in case unexpected operational issues with the siphon necessitated their reinstatement. The siphon has now operated successfully for several years. In the future, it is anticipated that the pump station and force main should be properly abandoned. Unfunded Projects The Capital Improvement Plan includes projects that have been clearly identified and programmed. It also includes some placeholder projects, where the specific project has not been identified but there is money allocated nonetheless. These placeholders are included in the plan to recognize that there is the need to plan for future replacement and rehabilitation projects, even though the specific projects have not yet been scoped and planned. Providing a placeholder for these future projects will 74 Construction of the FOG Receiving Station

75 Impact of Projects on Operating Budget While most of the capital projects planned for FY 2014/15 are replacements and rehabilitations of existing capital assets, some the FY 2014/15 capital projects will have a significant impact on the current and future operations and maintenance budgets of the District. The I&I Reduction projects in the Collection System (CIP #13707, #14701) are designed to decrease the amount of rainwater and groundwater that get into the system. This reduces future costs by reducing the need to build bigger pipes as well as reduces the amount of influent that the plant needs to treat. It also reduces the need for cleaning and root removal maintenance activities. The immediate, short-term savings have not been calculated. The increased capacity of the recycled water system (equalization, increased recycled water filters and conversion of the flocculating clarifier to a DAF CIP #13714) will result in increased electricity costs of approximately $50,000 for the DAF and $150,000 for the increased recycled water pumping when fully operational and producing an additional 1,700 acre feet of water annually. These costs are offset by a savings of approximately $240,000 in chemicals, for a net impact of reducing operating expenses by approximately $40,000 annually when fully operational. The Influent Pump Station replacement (CIP #13724) will allow greater flows to be pumped into the plant from the Collection System. The existing system is decades old and inefficient in its energy usage, but the new facility, even though more energy efficient, will have more, larger pumps. It is anticipated that the new system will result in a slight decrease in energy costs of approximately $3,000. The new system will decrease maintenance costs, as the existing system requires significant effort to maintain. Annual savings from pump parts is approximately $10,000. The expansion of the recycled water pipeline into MST (CIP #14726) and into the Los Carneros Water District (CIP #15718) will lead to increased maintenance and operating costs for those pipelines over time. These costs, including rehabilitation projects for all of the recycled water pipelines, are expected in future years and included in the CIP. The operating budget when the projects are completed (FY 15/16) will need to be increased to include an additional $70,000 to pay for annual cathodic protection testing and leak detection. These costs are anticipated and included in the recycled water rates when they increase in calendar year The project to split the north and south recycled water lines and add surge protection (CIP #14727) includes the installation of jockey pumps on the lines. These new, smaller pumps will allow the District to maintain line pressure during low levels of recycled water usage without operating the larger, energy intensive recycled water pumps. This project should save the District electricity costs (estimated at $7,500 annually), as well as long-term savings from less wear-and-tear on the larger pumps. Impacts of Capital Projects on Operating Budget CIP # 2015/ / / ($30,000) ($40,800) ($41,620) (13,000) (13,260) (13,530) ,000 35,700 36, ,000 35,700 36, (7,500) (7,650) (7,800) Total $19,500 $9,690 $9,870 New Administration Building under construction in

76 FY 2014/15 CIP Project Descriptions COLLECTION SYSTEM Mainline Sewer Rehabilitation FY 2014/15: $82,300 Ongoing program to conduct spot repairs to damaged sewer lines using NSD crews or an outside contractor, extending the useful life of these assets Manhole Raising / Rehabilitation FY 2014/15: $180,100 Ongoing program to fund the raising of manhole rims in streets that have been resurfaced. NSD crews replace damaged manholes in this program Lateral Replacement / Rehabilitation FY 2014/15: $67,200 Ongoing program to rehabilitate street laterals as required using NSD crews or an outside contractor Cleanout Installation / Rehabilitation FY 2014/15: $74,200 Ongoing program using NSD crews to install lateral clean-outs at the property line where one does not exist Inflow & Infiltration (I&I) Reduction Program Project Total: $700,725 FY 2014/15: $185,000 This is the second-to-last year of this program that conducts smoke testing and flow monitoring for I&I reduction projects in this program. A consultant will revise the Collection System Master Plan hydraulic model to determine the most cost effective method to address capacity deficiencies in the collection system Basin L - I&I Reduction Project 3 Project Total: $3,064,200 FY 2014/15: $2,553,500 Project 3 has been designed and constructed to reduce I&I in Basin L (north of Imola Avenue, south of Napa Creek, and west of the Napa River) Basin L - I&I Reduction Project 4 Project Total: $3,000,000 FY 2014/15: $1,000,000 The project will be designed and constructed to reduce I&I in Basin L (north of Imola Avenue, south of Napa Creek, and west of the Napa River) North Napa 18" ACP & Soscol Ave 14"ACP Project Total: $1,203,000 FY 2014/15: $421,100 This project will rehabilitate sewer main pipe. The pipes to be rehabilitated are degrading Upper Lateral Rehabilitation - Basin L Project Total: $225,000 FY 2014/15: $50,000 This pilot project will replace residenital private sewer lateral pipes in a portion of Basin L Post Street / Evans (from Silverade Tr to Juarez) Project Total: $575,200 FY 2014/15: $381,600 This project will replace or rehabilitiate sewer main pipe. The existing pipes are old and in poor condition Sarco Creek Pipeline Replacement - CalTRANS Project Total: $685,900 FY 2014/15: $20,000 This project, funded by CalTRANS, will relocate sewer main pipe adjacent to Silverado Trail that crosses Sarco creek. The relocation is needed for a Caltrans bridge project Browns Valley Road & First Street Project Total: $13,983,600 FY 2014/15: $500,000 The work in FY 13/14 and FY 14/15 is the first phase of a larger project to expand sewer capacity from the Browns Valley area. This first phase is budgeted at $1,000,000 addresses a specific portion of the project (near McCormick Lane) where sewer overflows have occurred in the past Siphon Rehabilitation #1 Project Total: $42,200 FY 2014/15: $42,200 This project will rehabilitate one of the smaller siphons in the collection system. 76

77 FY 2014/15 CIP Project Descriptions COLLECTION SYSTEM EQUIPMENT Vehicle Ford Ranger Project Total: $29,900 FY 2014/15: $29,900 The truck has reached the end of its useful life and needs to be replaced Vehicle 19 - CIPP Trailer Project Total: $14,000 FY 2014/15: $14,000 The trailer, used to repair and rehabilitate sewer lines, will be upgraded to include equipment for sewer main rehabilitaiton spot liners. LIFT STATIONS There are no new FY 2014/15 Sewer Lift Station projects. TREATMENT Phase 1 Recycled Water Expansion Project Total: $13,900,000 FY 2014/15: $6,920,500 This project will expand the District's recycled water production capacity to 3,700 AFY by constructing secondary effluent equalization, 1,400 square feet of sand filters, a new pump station and other ancillary facilities and piping necessary to integrate the new facilities into the existing treatment plant. This project is recommended in the Wastewater Treatment Plant Master Plan. TREATMENT - EQUIPMENT Secondary Pump Station Pump Rebuild (3) Project Total: $105,000 FY 2014/15: $35,000 The pumps and motors are nearing the end of their lifecycle and need to be rebuilt. FY 14/15 is the first year of a three year project to rebuild these three pumps DAFT Overflow Pumps (2) Project Total: $20,000 FY 2014/15: $10,000 The pumps and motors are nearing the end of their lifecycle and need to be rebuilt. FY 14/15 is the first year of a two year project to rebuild these two pumps WWTP MP - Solids Handling Improvments Project Total: $120,000 FY 2014/15: $120,000 This group of projects, recommended in the Treatment Plant Master Plan, includes replacing tube bundles Turbidmeters Tertiary Replacements (7) Project Total: $11,000 FY 2014/15: $11,000 This project replaces the existing terbidmeters as they have reached the end of their useful life and need to be replaced Effluent Overflow Meter Project Total: $120,000 FY 2014/15: $120,000 This project installs a flow meter on the effluent outfall, to more accurately record discharge to the river Amperometric Titrator Replacement Project Total: $5,000 FY 2014/15: $5,000 This lab equipment has reached the end of its useful life and needs to be replaced Rotork Actuator Replacement Project Total: $630,600 FY 2014/15: $82,400 There are 7 Rotock actuators scheduled to be replaced as part of this project (FY 2014/15 is year 2). The replacement schedule is based on age and condition assessment Rehabilitate Pond 1 Storage Structure Project Total: $5,000 FY 2014/15: $5,000 This project rehabilitates and adds a roof to the storage structure at Pond 1. 77

78 FY 2014/15 CIP Project Descriptions Aeration Basin Instrumentation and Control Project Total: $150,000 FY 2014/15: $50,000 This is the first year of a three year project to replace the electrical instrumentation and control mechanisms in the aeration basins Vehicle Ford F-250 Diesel Replacement Project Total: $30,000 FY 2014/15: $30,000 The truck has reached the end of its useful life and needs to be replaced. This truck was scheduled for replacement in FY 13/14, but was postponed for further analysis of needs. Resulting from that analysis, this truck will be replaced with a smaller, less expensive vehicle. TREATMENT - STRUCTURES Influent Pump Station Expansion Project Total: $15,500,000 FY 2014/15: $7,802,900 A new Influent Pump Station will be designed and constructed to replace the existing building. The pump station capacity will be increased to provide firm capacity for wet weather flows up to 60 million gallons per day. This project is recommended in the Wastewater Treatment Plant Master Plan WWTP MP - Pond Improvements Phase 2 Project Total: $256,000 FY 2014/15: $50,000 This project replaces the water transfer structures between ponds 2 and 4. SCADA SCADA PLC Replacement Project Total: $38,000 FY 2014/15: $38,000 This project replaces some of the PLCs that interface with the SCADA system / SCADA Server Replacements (2) Project Total: $32,000 FY 2014/15: $32, This project replaces two of the servers that run the SCADA software system. RECYCLING - DISTRICT Isolation Valve on Kirkland Line (Devlin Road) Project Total: $61,400 FY 2014/15: $15,000 This project installs an isolation valve on a particularly long stretch of recycled water pipeline that has no other way of isolating section if needed for repairs or maintenance. RECYCLING - EXPANSION North Bay Water Reuse Project FY 2014/15: $500,000 This is the cost of program development, project management, and environmental analysis associated with the expansion of recycled water production and delivery, and seeking federal and state grant revenues in support of recycled water MST RW Pipeline Construction Project Total: $14,200,000 FY 2014/15: $7,000,000 This project, financed by Napa County through WaterSmart grants and an SRF loan, will construct a recycled water pipeline from Skyline Park north through the MST area up to Hagen Road LCWD Recycled Water Pipeline Engineering Project Total: $68,000 FY 2014/15: $43,000 This project, financed by the Los Carneros Water District, will plan and engineer a recycled water pipeline from Stanly Ranch out through the LCWD area. These expenses only represent NSD staff time and expenses related to supporting LCWD on this portion of the project LCWD Recycled Water Pipeline Construction Project Total: $17,000,000 FY 2014/15: $8,000,000 This project, financed by the Los Carneros Water District and an SRF loan, will construct a recycled water pipeline from Stanly Ranch out through the LCWD area. 78

79 FY 2014/15 CIP Project Descriptions Split N/S Lines and Surge Protection Project Total: $2,029,000 FY 2014/15: $318,000 As part of making the MST and LCWD pipelines operational, it is necessary to separate and expend the recycled water pump station at the plant, to allow for different pumping pressures to the north and to the south. This will ensure that there is adequate but not unnecessary pressure in each direction. OTHER Development Technical Support FY 2014/15: $214,000 District staff reviews and comments on development plans involving sewer and recycled water facilities and contributed capital. 79

80 FY 2014/15 Capital Project Schedule Allocation of Capacity Charges # Name FY 14/15 % Funded by Capacity Charges % Funded by Other Revenue Total Capacity Charges Total Other Revenue COLLECTION SYSTEM Mainline Sewer Rehab 82, % - 82, Manhole Raising / Rehab 180, % - 180, Lateral Replacement / Rehab 67, % - 67, Cleanout Installation / Rehab 74, % - 74, I&I Reduction Program 185, % 60.6% 72, , Basin L - I&I Reduction Project 3 2,553, % 60.6% 1,006,079 1,547, Basin L - I&I Reduction Project 4 1,000, % 60.6% 394, , North Napa 18" ACP & Soscol Ave 14" ACP 421, % - 421, Upper Lateral Rehab - Basin L 50, % 60.6% 19,700 30, Post St/Evans (from Silverado Tr to Juarez) 381, % - 381, Sarco Creek Pipeline Replacement-Caltrans 20, % - 20, Browns Valley Rd & First St 500, % 0.0% 500, Siphon Rehabilitation #1 42, % - 42,200 COLLECTION SYSTEM - EQUIPMENT Vehicle Ford Ranger 29, % - 29, Vehicle 19 - CIPP Trailer 14, % - 14,000 TREATMENT WWTP MP - RW Expansion - Phase 1 6,920, % 60.6% 2,726,677 4,193,823 TREATMENT - EQUIPMENT Secondary PS Pump Rebuild (3) 35, % - 35, DAFT Overflow Pumps (2) Cornell 10, % - 10, WWTP MP - Solids Handling Improvements 120, % - 120, Turbidimeters (7) tertiary Replacements 11, % - 11, Effluent Overflow Meter 120, % - 120, Lab-Amperometric Titrator Replacement 5, % - 5, Main - Rotork Actuator Replacement 82, % - 82, Main-Rehab Pond 1 Storage Structure 5, % - 5, Main-Aeration Basin Instrumentation and Control 50, % - 50, Vehicle Ford F-250 Diesel 30, % - 30,000 TREATMENT - STRUCTURES WWTP MP - IPS Expansion 7,802, % 60.6% 3,074,343 4,728, WWTP MP - Pond Imp-Ph2-Trans Struct 2 to 4 50, % - 50,000 SCADA SCADA PLC Replacement 38, % - 38, SCADA Server Replacement 16, % - 16, SCADA Server Replacement 16, % - 16,000 RECYCLING - DISTRICT Isolation Valve on Kirkland Line (Devlin Rd) 15, % - 15,000 RECYCLING - EXPANSION North Bay Water Reuse Project 500, % 0.0% 500, MST RW Pipeline Construction 7,000, % - 7,000, LCWD PW Pipeline Planning & Engineering 43, % - 43, LCWD PW Pipeline Construction 8,000, % - 8,000, Split N/S Lines, surge protection 318, % 0.0% 318,000 - OTHER Development Technical Support 214, % 0.0% 214,000 - TOTAL 37,002,900 $8,825,689 $28,177,211 80

81 FY 23/24 Projected Total 10-Year CIP Napa Sanitation District # Name FY 13/14 Amended FY 14/15 Adopted FY 15/16 Projected FY 16/17 Projected FY 17/18 Projected FY 18/19 Projected FY 19/20 Projected FY 20/21 Projected FY 21/22 Projected FY 22/23 Projected 81 COLLECTION SYSTEM Mainline Sewer Rehab 96,900 82,300 84,800 87,300 89,900 92,600 95,400 98, , , , , Manhole Raising / Rehab 174, , , , , , , , , , ,000 2,064, Lateral Replacement / Rehab 65,300 67,200 69,300 71,300 73,500 75,700 77,900 80,300 82,700 85,200 87, , Cleanout Installation / Rehab 72,000 74,200 76,400 78,700 81,100 83,500 86,000 88,600 91,200 94,000 96, , I&I Reduction Program 20, , , Basin L - I&I Reduction Project 2 2,754, Basin L - I&I Reduction Project 3 510,700 2,553, ,553, Basin L - I&I Reduction Project 4-1,000,000 2,000, ,000,000 Basin L - I&I Reduction Project ,000,000 1,000, ,000,000 Basin X - I&I Reduction Project (TBD) ,500,000 1,500, ,000,000 Collection System Master Plan Update , , , North Napa 18" ACP & Soscol Ave 14" ACP 781, , , Silverado Trail Sliplining Rehab 180, Upper Lateral Rehab - Basin L - 50, , , Post St / Evans (from Silverado Tr to Juarez) - 381, , ,200 Soscol Ave (8th to Oil Company Rd) ,025,200 1,407, ,432,400 North Napa PS Force Main Abandonment , , , Sarco Creek Pipeline Replacement - Caltrans - 20,000 82, , , Browns Valley Rd & First St 500, ,000 51,500 1,273,100 3,933,800 4,051,800 4,173, ,983, Siphon Rehabilitation #1-42, ,200 Siphon Rehabilitation # , ,100 Siphon Rehabilitation # , ,500 Siphon Rehabilitation # , ,800 Trunk Sewers ,286,100 1,713, ,000,000 Trunk Sewers ,286,100 1,713, ,000,000 Trunk Sewers ,286,100 1,713,900-3,000,000 Trunk Sewers ,286,100 1,713,900 3,000,000 COLLECTION SYSTEM - EQUIPMENT CCTV Transporter Replacement , ,600 Lateral Jetter Replacement , ,300 Locatable Mini-Camera Replacement , ,300 Locatable Mini-Camera Replacement , ,300 Locatable Mini-Camera Replacement , ,300 Locatable Mini-Camera Replacement , ,300 Locatable Mini-Camera Replacement ,300 10,300 Eel Replacement , ,150 Eel Replacement , ,150 Eel Replacement ,150-5, Vehicle Kubota 36, Vehicle Plugup Truck - Secondary 52, , ,300 Vehicle Ford Ranger , , Vehicle Ford Ranger - 29, ,900 Vehicle Water Trailer , ,300 Vehicle Ford F , ,100 Vehicle Backhoe , , Vehicle Backhoe 120, Vehicle Water Truck , ,000 Vehicle Hybrid Escape , ,100 Vehicle TV Truck , , ,200 Vehicle Backhoe Trailer , ,000 Vehicle Dump Truck , ,500 Vehicle Rodder , ,000 Vehicle 18 - Cement Trailer , ,200 Vehicle 16-18ft Trailer , ,100 Vehicle Forklift , ,200 Vehicle Mini-Dump , ,900 Vehicle Mini-Dump , ,900 Vehicle Mini-Vactor , ,900 Vehicle Vactor , ,800 Vehicle Repair Truck ,000-69, Vehicle 19 - CIPP Trailer - 14, ,000

82 Napa Sanitation District 82 # Name FY 13/14 Amended FY 14/15 Adopted FY 15/16 Projected FY 16/17 Projected FY 17/18 Projected FY 18/19 Projected FY 19/20 Projected FY 20/21 Projected FY 21/22 Projected FY 22/23 Projected FY 23/24 Projected Total 10-Year CIP LIFT STATIONS West Napa Odor Control 97, Main - West Napa Channel Gate Replacement 45, Main - Stonecrest Pump Rebuild , ,000 Main - West Napa Pump Rebuild ,000-70, ,000 Lift Station Equipment Renewal & Replacement , ,000 Lift Station Equipment Renewal & Replacement , ,000 Lift Station Equipment Renewal & Replacement , ,000 Lift Station Equipment Renewal & Replacement ,000-40,000 Lift Station Equipment Renewal & Replacement ,000 40,000 TREATMENT WWTP MP - Pond Aeration 1,556, WWTP MP - RW Expansion - Phase 1 6,705,020 6,920, ,920,500 WWTP MP - RW Expansion - Phase ,173,200-2,173,200 Wine Waste Receiving Station - 500,000 2,000, ,500, Oxidation Pond 1 Dredge ,205 2,719, ,324,305 TREATMENT - EQUIPMENT WWTP MP - Spare Digester Mixer 380, Digester Recirc Pumps 22, Ops - Area Drain & Pond 1 Isolation Valves 80, Spare Chemical Pump 14, Dual Fuel Boiler Burner Energy Management System Secondary PS Pump Rebuild (3) - 35,000 35,000 35, , Residual Analyzers (Deox) Replacements 60, WWTP MP - Activated Sludge Diffuser Replacement , , WWTP Clarifier Safety & Wiring Overhaul 55, DAFT Overflow Pumps (2) Cornell - 10,000 10, ,000 WWTP MP - 3W System Improvements , , WWTP MP - Solids Handling Improvements - 120, , Turbidimeters (7) Tertiary Replacements - 11, , Gas Compressor Cooler 61, Digester Draft Tube Overhaul , , Wash Pumps (2) 12, Effluent Overflow Meter - 120, ,000 Ops - SBS Flash Mixers , ,000 Ops - RAS System Flow Meter , ,000 Ops - Ops Building Space & HVAC Study , ,000 Lab - Ventilation Project - 79,600 79,600 Lab - Upgrade Project , ,300 Lab - Southend Hood Replacement , ,000 Lab - Northend Hood Replacement , , Lab - Sampler 3740 Replacement 5, Lab - Sampler 3710FR Replacement 5, ,700-7, Lab - Sampler 3710FR Replacement ,700-7, Lab - Sampler 3710FR Replacement ,700-7, Lab - Sampler 3710FR Replacement ,900 7, Lab - Sampler 3710FR Replacement ,900 7,900 Lab - Lab Grade Dishwasher Replacement , ,000 Lab - Refrigerator/Freezer Replacement , , Lab - Amperometric Titrator Replacement - 5, ,000 Lab - Microscope Replacement , , Lab - Balance Replacement 15, Lab - Sampler 3710FR Replacement , ,900 Lab - Autoclave Replacement ,000-11,000 Lab - UV Spectrophotometer Replacement , ,000 Lab - BOD Incubator Replacement , ,300 Lab - Sampler 4700 Replacement ,700-7,700 Lab - Sampler 4700 Replacement ,700-7,700 Lab - Sampler 4700 Replacement ,700-7,700 Lab - Sampler 4700 Replacement ,900 7,900 Lab - Sampler 4700 Replacement ,900 7,900 Lab - Centrifuge Replacement ,500-7,500

83 Napa Sanitation District 83 # Name FY 13/14 Amended FY 14/15 Adopted FY 15/16 Projected FY 16/17 Projected FY 17/18 Projected FY 18/19 Projected FY 19/20 Projected FY 20/21 Projected FY 21/22 Projected FY 22/23 Projected FY 23/24 Projected Total 10-Year CIP Main - Stationary Gas Detector Replacement 100, Main - Rotork Actuator Replacement 80, Main - Rotork Actuator Replacement - 82, ,400 Main - Rotork Actuator Replacement , ,900 Main - Rotork Actuator Replacement , ,500 Main - Rotork Actuator Replacement , ,800 Main - Rotork Actuator Replacement , ,500 Main - Rotork Actuator Replacement , , Main - Rehab Pond 1 Storage Structure - 5, , Main - Belt Press Polymer Skid Replacement 30, Main - Septage Pump & Motor Replacement , ,000 Main - Septage Card Reader Replacement , ,000 Main - Primary Clarifier Mech/Struct Rehabilitation , , ,000 Main - Secondary Clarifier Mech/Struct Rehabilitation , , , Main - TWAS Pump Replacement 40, Main - River Discharge Marsh Pipe Realignment , , Main - Aeration Basin Instrumentation and Control - 50,000 50,000 50, , Vehicle Ford F-250 Diesel 48, Vehicle Honda ATV 12, Vehicle Ford F-250 Diesel 57,000 30, ,000 Vehicle Ford F , , Vehicle Ford F , Vehicle Ford F-250 Diesel , ,700 Vehicle Escape Hybrid , ,100 Vehicle Electric Truck , ,500 Vehicle Forklift , ,200 Vehicle Yard Dump , ,300 Vehicle Forklift TH , ,000 Vehicle Ford F-550 EM Truck ,000-69,000 Vehicle Ford F ,500-50,500 Vehicle 40 - Cushman 1200X ,400-13,400 Vehicle 41 - Cushman 1200X ,400-13,400 Vehicle 42 - Cushman 1200X ,400-13,400 TREATMENT - STRUCTURES WWTP MP - IPS Expansion 9,453,155 7,802, ,802, Day Tank Gas Holder Membrane Replacement 400, " Primary & Headworks Manholes Rehab 190, WWTP MP - Headworks Improvements , , , ,435,100 WWTP MP - Primary Treatment Improvements ,200 56, , ,000 WWTP MP - Second Digester ,000 2,218,100 12,395,300-14,874,400 WWTP MP - Aeration Basin Expansion , , ,900 Building HVAC , ,200 WWTP Site Paving , , WWTP MP - Pond Imp - Ph 2 - Trans Struct 2 to 4-50, , ,000 SCADA SCADA MP Phase 4 38, SCADA MP Phase , ,000 SCADA MP Project # , ,000 SCADA MP Project # , ,000 SCADA MP Project # , ,000 Telemetry Upgrades , , SCADA PLC Replacement - 38, , SCADA Server Replacement 24,385 16, , SCADA Server Replacement - 16, ,000 SCADA Server Replacement , ,000 SCADA Server Replacement , ,000 SCADA Server Replacement - 25,000 25,000 SCADA Server Replacement ,000 16,000 RECYCLING - DISTRICT WWTP MP - Line Recycled Water Reservoir , , , Isolation Valve on Kirkland Line (Devlin Road) - 15,000 46,400-61,400 Third Recycled Water Reservior ,000 3,914,300 4,294,300

84 Napa Sanitation District 84 # Name FY 13/14 Amended FY 14/15 Adopted FY 15/16 Projected FY 16/17 Projected FY 17/18 Projected FY 18/19 Projected FY 19/20 Projected FY 20/21 Projected FY 21/22 Projected FY 22/23 Projected FY 23/24 Projected Total 10-Year CIP Jameson Sprinkler Replacement - Field B , ,000 Jameson Sprinkler Replacement - Field C , ,000 Jameson Sprinkler Replacement - Field D , ,000 Jameson Sprinkler Replacement - Field E , ,000 Equipment/Rehabs , ,000 Equipment/Rehabs , ,000 Soscol RW Pump Replacement , ,000 Equipment/Rehabs , ,000 Soscol RW Pump Replacement , ,000 Equipment/Rehabs , ,000 Soscol RW Pump Replacement , ,000 Equipment/Rehabs , ,000 Pull Flail Chopper Replacement , ,900 Vehicle Tractor , ,500 Vehicle Ford F , , Vehicle Yanmar Tractor (10yr) 74, ,800 96,800 Vehicle Ford F , ,900 Vehicle Ford F-350 SB , ,200 Vehicle Kubota , ,700 Vehicle Kubota , ,700 Vehicle Ford F-350 SRW , ,500 Vehicle John Deer 8430T Tractor , ,800 RECYCLING - EXPANSION North Bay Water Reuse Project 125, , , , , , , , , , ,000 2,550, MST RW Pipeline Planning & Engineering 333, MST RW Pipeline Construction 4,700,000 7,000,000 2,500, ,500, LCWD RW Pipeline Planning & Engineering 25,000 43, , LCWD RW Pipeline Construction - 8,000,000 9,000, ,000,000 RW Storage Project ,000,000 40,000, Split N/S Lines, surge protection 344, ,000 1,366, ,684,800 OTHER Development Technical Support 208, , , , , , , , , , ,000 2,449, Office/Corp Yard Relocation 100, Vehicle Ford C-Max 33, ,400 48,400 Vehicle Ford Escape Hybrid , , Vehicle Ford F , ,000 39,000 Vehicle CSET Trailer , , Vehicle Ford Taurus , ,700 Vehicle Ford F ,000-35,000 PROJECT TOTALS $30,970,430 $37,002,900 $21,013,905 $14,425,150 $9,705,700 $5,794,900 $7,425,150 $5,260,900 $7,863,400 $20,398,450 $48,793,300 $177,683,755 Cumulative Total (FY 14/15 - FY 23/24) $37,002,900 $58,016,805 $72,441,955 $82,147,655 $87,942,555 $95,367,705 $100,628,605 $108,492,005 $128,890,455 $177,683,755

85 Ten-Year Financial Plan Visitors check out microorganisms in the Plant Laboratory during the 2010 Open House event. 85

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87 Ten-Year Financial Plan Plan Description Also called a Financial Master Plan or a Ten-Year Financial Forecast, the Ten-Year Financial Plan is a projection of operating and capital expenditures, along with projections of rates and the revenues they are anticipated to generate over that time. The Ten- Year Financial Plan evaluates whether the revenues are adequate to cover the projected costs. This Plan addresses the following questions. Over the next 10 years What are the District s projected revenues, and what assumptions are used? What are the District s projected operating costs, and what assumptions are used? What are the projected capital costs for the District? Will the District use pay-as-you-go financing or debt financing for its capital projects? Are sewer service charge rates sufficient? Link to Strategic Plan The District s Strategic Plan (discussed in Budget Overview on pages and included in the Appendix of this budget) includes numerous objectives and a timeframe for completion of those projects. This Ten-Year Financial Plan makes assumption that all of the objectives in that plan are completed on time, and that any one-time or ongoing financial impact resulting from implementing the Strategic Plan are included in the Ten-Year Financial Forecast. Revenue Forecast Sewer Service Charges Prior to 2006, the District last increased its sewer service charge in For FY07 through FY09, the District increased the sewer service charge by 15% per year to $315 in FY07, $362 in FY08 and $416 in FY09. Since then, the District has increased the fee by the Consumer Price Index (CPI). In 2011, the District went through the Proposition 218 process, thereby setting the sewer service charge to increase with CPI through fiscal year 2015/16. The forecast assumes an annual CPI (San Francisco/Oakland/San Jose CPI for All Urban Users) increase of 2.6% in FY 14/15 and 2.2% thereafter. 87 Recycled Water Fees Recycled water fees are becoming a more significant source of revenue for the District. These are the fees charged to users of recycled water. The current fee is $0.98 per 1,000 gallons of water ($ per acre-foot), and increases every January 1 based on CPI. Fees are set via service contract with the end users. All end user agreements expire in October In 2012, the District adopted new recycled water rates that go into effect in The rates will be as follows: Rate Description $1.57/kgal Peak demand usage (April - October) $1.25/kgal Large contract users $1.20/kgal Off peak usage (Nov. Feb.) $1.05/kgal March Rates will increase with CPI starting in The forecast assumes that the District will increase recycled water sales from the current 1,000 acre feet to 2,350 acre feet. Future customers include land owners in the MST area, the Napa State Hospital, St. Regis Resort, Los Carneros Water District and Montelcino Resort. Currently, none of these potential users are taking recycled water. Capacity Charges In July 2014 and annually thereafter, the capacity charge rate will increase with the San Francisco Engineering News Record s Construction Cost Index (ENR-CCI) for San Francisco (February-to- February), an inflation measure for capital infrastructure costs. Capacity charges increase 5.1% to $8,723 per Equivalent Dwelling Unit (EDU) in FY 2014/15. Development, especially development of hotels and restaurants, is anticipated to increase starting in FY 2014/15. The capacity charge forecast assumes that development will increase to 290 EDU in FY 2014/15 with an additional 160 EDU for hotel and restaurant activity, for a total of 450 EDU. In each year following, it is assumed there will be 290 EDU annually, with another 225 EDU increase in FY 2015/16, 505 EDU increase in FY 2016/17, and 110 EDU increase in FY 2017/18 related to hotel and restaurant growth. Leases and Rents Lease revenues now include only the existing lease with Eagle Vines Golf Club. While there is still opportunity for the District to receive lease payments from the Somky property and potentially

88 other properties, the Ten-Year Financial Plan only includes revenues for leases that have already been negotiated and executed. Other Revenues There is new revenue starting in FY 2017/18 associated with the Winery Receiving Station capital project. This revenue is based on the project being feasible and able to provide a return on investment of five years. There are a number of other smaller revenues collected by the District. They have been forecasted based on historical collection and any anticipated increases in rates due to CPI or other factors. The North Napa Pump Station has been declared surplus property by the District. The Ten-Year Financial Plan includes $3 million in revenues from the sale of this property, although that estimate is not based on any market analysis of the property value. Operating Cost Forecast Operating expenses for the District includes salaries and benefits, maintenance and operations of the collection and treatment system, and the purchase of materials and supplies. The District must also fund its annual debt service. Salaries are controlled by three Memoranda of Understanding (MOU) with employees. Current MOUs expire on June 30, 2014 and are being renegotiated. Salaries have been projected assuming a 2.0% annual cost of living adjustment (COLA), following the budget assumptions adopted by the Board. Some benefits, such as OPEB and retirement expenses, are calculated as a percentage of salary, while other benefits, such as health care, increase based on joint purchase agreements. Health care costs are assumed to increase at an 8% rate, and retirement expenses as a percentage of salary are expected to increase an additional 4-6% over the next five years. Medical in lieu payments are projected to continue per the existing MOU. Workers compensation insurance increased in FY 2014/15, but is expected to remain flat in future years. For the Ten-Year Financial Plan, salaries and benefits combined are projected to increase 3.0% to 4.3% annually. Services and supplies are budgeted to increase 2.0% annually to account for increases in inflation. It is 88 assumed that there is no change in current service levels, except those anticipated as part of capital project implementation (e.g., expanded recycled water delivery). The anticipated operating expenditure impact of planned capital projects has been included in the forecast. Capital Costs There are several master plans that influence the overall Ten-Year Capital Improvement Plan, including the Treatment Plant Master Plan, the Collection System Master Plan and the Recycled Water Strategic Plan. These plans serve to identify the capital improvements that should be made within each area over the next 20 years. When all of the recommendations from the master plans are combined, there is insufficient revenue to pay for all of the projects within the next ten years. This shortfall will be addressed in the section titled Long Term Planning Committee Recommendations. The budget and Ten-Year Capital Improvement Plan, described in detail in the previous section of this budget document, represent the priority projects from these plans. The Ten-Year Financial Plan incorporates the Ten-Year Capital Improvement Plan. Pay-Go vs. Debt Financing Debt financing means that the District would either sell bonds or enter into a loan (such as a State Revolving Fund loan) to get money to pay for capital projects, then pay back that money over time with interest. Pay-as-you-go financing, also called pay-go means that the District needs to accumulate the money for the project and already have it prior to the work being completed. District policy states that the District shall have a preference to finance capital improvements using pay-go financing and shall issue long-term debt only to finance capital improvements that cannot be readily financed from current revenues. Debt financed projects must be major, non-recurring improvements with a minimum of five years of useful life. The Ten-Year Financial plan assumes that debt would be issued for specific projects, with all other projects in the CIP being financed as pay-go.

89 In FY 2012/13, the District issued bonds and received $33 million toward the pond aeration project ($2 million), the first phase of the recycled water filters expansion ($16 million), and replacement or expansion of the Influent Pump Station ($15 million). The Ten-Year Forecast shows the proceeds from the debt in Beginning Fund Equity, as well as the associated debt service payments. The plan also shows that in the ninth year of the plan, in FY 2022/23, it will be necessary to issue debt to pay for specific capital projects, namely the construction of the second digester ($15 million), and again in FY 2023/24 to pay for the non-grant funded portion of the recycled water storage project ($20 million). Ten-Year Cash Flow The table here and on the next page shows the Ten- Year Financial/Cash Flow Forecast for the District. The table includes starting fund equity and ending fund equity on an annual basis, forecasts for operating and non-operating revenue and operating expenses. Because it is a cash flow model, the forecast includes expenses for capital outlay for the year it is expensed, as well as proceeds from issuing debt. Also, at the end of each year, there is an adjustment made to the ending fund equity numbers to account for necessary reserves to come up with an amount of equity that is available for use. 10-Year Financial/Cash Flow Forecast 2014/ / / / /19 Beginning Fund Equity $23,943,700 $13,896,700 $11,657,300 $10,742,400 $8,358,700 Operating revenue Sewer service charges 18,963,000 19,595,000 20,279,000 21,124,000 21,794,000 Capacity Charges 3,925,000 4,654,000 7,443,000 3,880,000 3,014,000 Recycled Water Sales 319, ,000 1,005,000 1,027,000 1,052,000 Hauler Fees 230, , , , ,000 Miscellaneous Revenue 114, , , , ,000 Total Operating Revenue 23,551,700 25,215,000 29,087,000 26,919,000 26,756,000 Non-Operating Revenue Interest 116,100 69,000 87, , ,000 Rents and leases 113, , , , ,000 Sale of Property 20, ,000, Fed & State Grants 5,236,000 1,700, Other Jurisdictions 16,553,000 10,500, Proceeds from Sale of Bonds for new projects Total - Non-Operating Revenue 22,058,100 12,466,400 3,788, , ,000 Total Revenue 45,609,800 37,681,400 32,875,500 27,146,000 26,983,000 Operating Expense Salaries and benefits 8,656,840 8,914,231 9,274,113 9,625,874 10,012,962 Services and supplies 5,212,080 5,179,500 5,283,000 5,389,000 5,497,000 Taxes and Other 33,150 33,150 33,150 33,150 33,150 Arbitrage payment Debt Service - Existing 4,751,800 4,780,000 4,775,000 4,776,000 4,772,000 Debt Service-New in 2022/ Total Operating Expense 18,653,870 18,906,881 19,365,263 19,824,024 20,315,112 Capital Projects 37,002,900 21,013,905 14,425,150 9,705,700 5,794,900 Total - All Expenses 55,656,770 39,920,786 33,790,413 29,529,724 26,110,012 Net revenue (deficit) (10,046,970) (2,239,386) (914,913) (2,383,724) 872,988 Ending combined fund equity $13,896,730 $11,657,314 $10,742,387 $8,358,676 $9,231,688 RW Repair & Replacement Reserve $0 $0 $0 $0 $0 15% Operating Reserve $2,085,000 $2,119,000 $2,189,000 $2,257,000 $2,331,000 Cash Flow Reserve $8,240,000 $8,487,000 $8,742,000 $9,004,000 $9,274,000 Fund Equity Available for Use $3,571,730 $1,051,314 ($188,613) ($2,902,324) ($2,373,312) 89

90 10-Year Financial/Cash Flow Forecast 2019/ / / / /24 Beginning Fund Equity $9,231,700 $9,546,500 $12,363,000 $12,965,900 $15,153,000 Operating revenue 0.00% 0.00% 0.00% 0.00% 0.00% Sewer service charges 22,430,000 23,084,000 23,756,000 24,447,000 25,156,000 Capacity Charges 3,123,000 3,236,000 3,352,000 3,473,000 3,598,000 Recycled Water Sales 1,097,000 1,142,000 1,187,000 1,238,000 1,290,000 Hauler Fees 256, , , , ,000 Miscellaneous Revenue 129, , , , ,000 Total Operating Revenue 27,555,000 28,376,000 29,218,000 30,090,000 30,985,000 Non-Operating Revenue Interest 138, , , , ,000 Rents and leases 126, , , , ,000 Sale of Property Fed & State Grants Other Jurisdictions Proceeds from Sale of Bonds for new projects ,000,000 20,000,000 Total - Non-Operating Revenue 264, , ,000 15,393,000 20,440,000 Total Revenue 27,819,000 28,672,000 29,596,000 45,483,000 71,425,000 Operating Expense Salaries and benefits 9,667,867 10,071,419 10,495,538 10,944,340 11,416,946 Services and supplies 5,607,000 5,719,000 5,833,000 5,950,000 6,069,000 Taxes and Other 33,150 33,150 33,150 33,150 33,150 Arbitrage payment Debt Service - Existing 4,771,000 4,771,000 4,768,000 4,766,000 4,766,000 Debt Service-New in 2022/ ,204,000 2,808,000 Total Operating Expense 20,079,017 20,594,569 21,129,688 22,897,490 25,093,096 Capital Projects 7,425,150 5,260,900 7,863,400 20,398,450 48,793,300 Total - All Expenses 27,504,167 25,855,469 28,993,088 43,295,940 73,886,396 Net revenue (deficit) 314,833 2,816, ,912 2,187,060 (2,461,396) Ending combined fund equity $9,546,533 $12,363,031 $12,965,912 $15,152,960 $12,691,604 RW Repair & Replacement Reserve $23,000 $69,000 $135,000 $223,000 $311,000 15% Operating Reserve $2,296,000 $2,374,000 $2,454,000 $2,539,000 $2,628,000 Cash Flow Reserve $9,552,000 $9,839,000 $10,134,000 $10,438,000 $10,751,000 Fund Equity Available for Use ($2,324,467) $81,031 $242,912 $1,952,960 ($998,396) This model assumes that all fund equity available at the end of one year is rolled over for use in the following year. The model also assumes that there is no underspending of operating expenses, although traditionally there is a small percentage of operating budget that is not spent each year. Long Term Planning Committee Recommendations The Ten-Year Financial Plan and Cash Flow Forecast represents what staff believes is the most realistic projections of revenues and expenditures based on current conditions, rate policies, contracts and trends. However, the forecast shows that the Ten-Year Forecast is out of balance by approximately $2.9 million. There is sufficient cash flow to the District to maintain its spending plan through FY 2015/16 and potentially through FY 2016/17, but thereafter the District has insufficient cash flow. There are several options discussed by the committee to balance this shortfall: Not build the Winery Receiving Station (FY 2015/16 and 2016/17; $2.5 million). 90

91 Ten-Year Financial Forecast $25 $20 RW R&RReserve Cash Flow Reserve 15% Operating Reserve Ending Fund Equity Note: Forecast is balanced when green line stays above columns Millions $15 $10 $5 $0 2014/ / / / / / / / / /24 Move the Basin X I&I Reduction Project out beyond the Browns Valley Road & First Street sewer capacity expansion project (to begin FY 2020/21). Wait and see if sufficient revenues are received by the District, or other expenses are lower than projected, and make a decision next fiscal year. The Long Term Planning Committee, a subcommittee of the Board of Directors, has recommended that the District adopt the Ten-Year Capital Improvement Plan and Ten-Year Financial Forecast as presented, even though it shows a shortfall of $2.9 million in FY 2017/18. The Committee believes this appropriate because the following reasons: 1. The feasibility of the Winery Receiving Station project is going to be studied in FY 2014/15. If the project is determined to be infeasible, then the capital project could be removed from the CIP for FY 2015/16 and FY 2016/17. The associated revenue from that receiving station would also need to be removed from the Ten-Year Financial Forecast. 2. There are a number of tentative revenue assumptions in the revenue forecast, as well as some potential revenues that have not been included. Due to this high level of uncertainty about revenue availability, it is believed to be more prudent to leave the capital plan as is, without making changes, since these assumptions could have significant impacts on the amount of available resources. 3. Because the shortfall is several years out into the future, it is more prudent to wait until that time to determine which capital projects have the lowest priority and could be postponed or eliminated from the CIP. Sewer Service Charge Rate Adequacy The District collects the annual sewer service charge on the county property tax rolls. By law, the revenue from this charge cannot exceed the cost of providing the associated services, including ongoing operating expenses, the timely replacement and rehabilitation (R&R) of capital assets, and current and future debt service. The table assumes the current CPI increase formula. The following table shows the calculation to determine whether the sewer service charge is sufficient to meet the operating expenses and R&R needs for the District s capital assets. To meet this need, it is assumed that the R&R amount should be between 2% and 4% of depreciable net fixed assets. The table shows that over the next five years the District is projected to meet its needs with the proposed sewer service charge. 91

92 Calculation of Sewer Service Charges Rate Based on Asset-Life-Cycle Cost Budget Projected Projected Projected Projected 2014/ / / / /19 Operating Expense Salaries and benefits 8,656,840 8,914,231 9,274,113 9,625,874 10,012,962 Services and supplies 5,212,080 5,179,500 5,283,000 5,389,000 5,497,000 Taxes and Other 33,150 33,150 33,150 33,150 33,150 13,902,070 14,126,881 14,590,263 15,048,024 15,543,112 Debt Service Totals Debt Service - Existing 4,751,800 4,780,000 4,775,000 4,776,000 4,772,000 Debt Service-New ,751,800 4,780,000 4,775,000 4,776,000 4,772,000 Allocation of Debt Service to SSC 60.6% 60.6% 60.6% 60.6% 60.6% Allocated Debt 2,879,591 2,896,680 2,893,650 2,894,256 2,891,832 Operating Expenses + 16,781,661 17,023,561 17,483,913 17,942,280 18,434,944 Allocated Debt Depreciable Net Fixed Assets 155,000, ,000, ,000, ,400, ,100,000 % Annual Renewal & Replacement 3.0% 3.0% 3.0% 3.0% 3.0% Cap Contribution for R&R 4,650,000 5,100,000 5,550,000 5,982,000 6,273,000 Total Expenses 21,431,661 22,123,561 23,033,913 23,924,280 24,707,944 Offsetting Revenues Recycled Water Sales 319, ,000 1,005,000 1,027,000 1,052,000 Hauler Fees 230, , , , ,000 Rents & Leases 113, , , , ,000 Interest & Misc 230, , , , ,000 Other Chgs for Srvc (CAFR) ,800 1,150,000 1,570,000 1,622,000 1,655,000 Expenses less revenues 20,538,861 20,973,561 21,463,913 22,302,280 23,052,944 Projected # of EDU 40,360 40,810 41,325 42,120 42,520 Calculated SSC Rate at 3% R&R $ $ $ $ $ Forecasted Rate $ $ $ $ $ Difference -$ $ $ $ $29.62 Rate at 2% R&R Rate at 4% R&R % of R&R at Forecasted Rate 2.0% 2.2% 2.4% 2.4% 2.4% 92

93 Debt Construction of the secondary effluent equalization basin in

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95 Debt The Napa Sanitation District issues long term debt for the construction of significant capital assets. Debt service is the annual or semi-annual payments the District makes to repay the principal and interest on its debt. Debt Policy As a matter of policy, the District has a preference to use pay-as-you-go financing for its capital projects and only uses debt financing for improvements that it cannot readily finance from current revenues. Exceptions can be made on a case-by-case basis for no-interest and extremely-low-interest loan programs to pay for capital projects. Debt can only be used for major, non-recurring capital items, and the debt repayment timeline cannot exceed the expected useful life of the asset being financed. Debt can only be issued when it has been shown that the District has the ability to pay all of its current obligations from current revenues and still have available 125% of the expected debt service amount to pay the debt service. The District s complete debt policy can be found in Appendix D, Section 5. Current Debt Obligations 2003 SRF In 2003, the District entered into a 20- year loan with the State of California s State Water Resource Control Board Revolving Fund (SRF). The proceeds from this loan, $901,376, were used for replacement of pipes in the collection system. The interest rate on this loan is 2.5%, with annual debt service of $60,247. (See Debt Service Table 1.) Outstanding principal on this debt obligation is $480,217 as of July 1, Series 2009B This 20-year Certificate of Participation was sold as a fixed-rate bond through competitive bid, and has a true interest cost of about 3.6%. The $26,675,000 in proceeds was used to refinance the 1998 COPs, saving the District over $250,000 annually in debt service payments. Annual debt service for this bond is $1,960,754. (See Debt Service Table 4.) Outstanding principal on this debt obligation is $22,470,000 as of July 1, Series 2012A This 20-year Certificate of Participation was delivered and executed to provide funds to repay the outstanding Adjustable Rate Refunding Revenue Certificates of Participation, Series 2009A and to finance $33 million in new capital projects. Annual debt service for this bond is $2,658,375. Outstanding principal on this debt obligation is $36,725,000 as of July 1, (See Debt Service Table 5.) Debt Covenants A debt covenant is a requirement imposed on the District by a debt holder. These requirements range from requirements to pay the principal and interest payments on particular days of the year, to preparing and filing audited financial statements, to very specific financial performance requirements. There is one significant debt covenant that has a financial impact to the District. This covenant applies to all of the District s debt, and is a debt service coverage requirement. Debt service coverage is the ratio of net revenues (revenues minus operating expenses) to annual debt service requirements. The District is required by the bond covenant to maintain a debt service coverage ratio of at least For FY 2014/15, the District s coverage ratio is budgeted to be SRF In 2008, the District entered into a 20- year loan with the State Water Resources Control Board. This loan, which came in two phases, was for a total of $1,559,673 and was used to replace aging infrastructure in the collection system. This is a zero-percent interest loan; however, the annual debt service payment of $93,581 includes a % state match and is recorded as imputed interest. (See Debt Service Tables 2 and 3.) Outstanding principal on this debt obligation is $1,214,834 as of July 1,

96 Debt Capacity & Debt Limitations Debt Capacity is the difference between the amount of debt the District has outstanding (sold and authorized) and the maximum amount of debt the District can incur within its legal, public policy and financial limitations. Revenue The District does not issue general obligation debt, and as such, there is no legal limitation on the amount of debt it can issue. The District is limited by the debt policies that it sets for itself (described above and in Appendix D) and by financial limitations. Financial limitations include two factors: Debt Coverage Ratio Calculation Estimated FY 13/14 Budget FY 14/15 Sewer Service Charges $ 18,400,000 $ 18,963,000 Capacity Charges $ 1,500,000 $ 3,925,000 Recycled Water $ 325,000 $ 319,000 Interest $ 130,100 $ 116,100 Rents & Leases $ 735,650 $ 113,000 Other Revenue (excl. sale of property and grant revenue) $ 400,000 $ 344,700 Operating Expenses $ (12,400,796) $ (13,909,670) Net Revenue $ 9,089,954 $ 9,871,130 Parity Debt Service 1) willingness of the bond market to loan the District money, and 2) limitations on future debt placed on the District by current debt. First, the amount of debt the District can issue is limited by whether there are financial and other institutions and other buyers in the market willing to purchase the bonds that the District wants to issue. In tight capital markets, or if the financial health of the District is in question, the amount of debt the District can issue under favorable terms can be limited. Second, the debt coverage ratio imposed by existing debt holders also applies to any future debt the District may want to issue. By forecasting operating revenues and expenditures and applying the 1.25 debt coverage ratio, a debt capacity can be calculated. Currently, the District has the capacity to issue approximately $20 million in additional debt (3.5% TIC, 20 year term), assuming that there was a buyer for that debt in the bond market, the District could pay the debt service, and other District financial policies are maintained SRF $ 60,247 $ 60, SRF $ 93,581 $ 93, B COP $ 1,962,379 $ 1,960, A COP $ 2,651,336 $ 2,658,375 Total Debt Service (excl. debt administration expenses) $ 4,767,543 $ 4,772,957 Parity Debt Coverage Ratio (net revenue total debt service) Future Debt Issues The Ten-Year Capital Improvement Plan and the Ten-Year Financial Plan assume that the District will contract with the state for a State Revolving Fund or sell Certificates of Participation in FY 2022/2023 for the purpose of constructing the second digester. There is also an assumption that the District would enter into long-term financing through the U.S. Bureau of Reclamation in FY 2023/24 to build recycled water storage. There are no other assumptions regarding additional debt issuance or the refinancing of existing debt. 96

97 Napa Sanitation District Debt Service Table 1 Napa Sanitation District 2003 SWRCB Revolving Fund Loan 2.5%, 20 year term $901,376 Fiscal Year Annual Principal Ending Total Jul 1 Interest Payment Principal Payment 2013/14 13,182 47, ,217 60, /15 12,005 48, ,976 60, /16 10,799 49, ,529 60, /17 9,563 50, ,845 60, /18 8,296 51, ,895 60, /19 6,997 53, ,646 60, /20 5,666 54, ,065 60, /21 4,302 55, ,121 60, /22 2,903 57,343 58,777 60, /23 1,469 58,777-60, / / / / / / / / / / Source: District Documents 97

98 Napa Sanitation District Debt Service Table 2 Napa Sanitation District 2008 SWRCB Revolving Fund Loan E. Spring St. Sewer Rehabilitation Phase I 20 year term $1,376,804 Fiscal Year Imputed Principal Ending Total Jul 1 Interest Payment Principal Payment 2013/14 21,149 61,460 1,072,217 82, /15 20,002 62,606 1,009,611 82, /16 18,834 63, ,837 82, /17 17,645 64, ,873 82, /18 16,433 66, ,697 82, /19 15,198 67, ,287 82, /20 13,941 68, ,619 82, /21 12,660 69, ,670 82, /22 11,355 71, ,417 82, /23 10,026 72, ,834 82, /24 8,672 73, ,897 82, /25 7,292 75, ,580 82, /26 5,887 76, ,859 82, /27 4,456 78, ,706 82, /28 2,998 79,611 81,096 82, /29 1,513 81,096-82, / / / / Source: District Documents 98

99 Napa Sanitation District Debt Service Table 3 Napa Sanitation District 2008 SWRCB Revolving Fund Loan E. Spring St. Sewer Rehabilitation Phase II 20 year term $182,869 Fiscal Year Imputed Principal Ending Total Jul 1 Interest Payment Principal Payment 2013/14 2,785 8, ,617 10, /15 2,633 8, ,278 10, /16 2,479 8, ,785 10, /17 2,323 8, ,136 10, /18 2,163 8, ,327 10, /19 2,000 8,972 99,355 10, /20 1,835 9,138 90,217 10, /21 1,666 9,306 80,911 10, /22 1,494 9,478 71,433 10, /23 1,319 9,653 61,780 10, /24 1,141 9,831 51,948 10, / ,013 41,935 10, / ,198 31,737 10, / ,386 21,351 10, / ,578 10,773 10, / ,773-10, / / / / Source: District Documents 99

100 Napa Sanitation District Debt Service Table 4 Napa Sanitation District Refunding Revenue Certificates of Participation, Series 2009B (1998 Refunding Project) 3% to 4% Range, 3.6% True Interest Cost (TIC), 20 year term $26,675,000 Fiscal Year Annual Principal Ending Total Jul 1 Interest Payment Principal Payment 2013/14 857,379 1,105,000 22,470,000 1,962, /15 800,754 1,160,000 21,310,000 1,960, /16 741,254 1,220,000 20,090,000 1,961, /17 691,779 1,265,000 18,825,000 1,956, /18 653,229 1,305,000 17,520,000 1,958, /19 613,554 1,340,000 16,180,000 1,953, /20 572,064 1,380,000 14,800,000 1,952, /21 527,518 1,425,000 13,375,000 1,952, /22 479,371 1,470,000 11,905,000 1,949, /23 427,781 1,520,000 10,385,000 1,947, /24 372,634 1,575,000 8,810,000 1,947, /25 313,431 1,635,000 7,175,000 1,948, /26 251,087 1,690,000 5,485,000 1,941, /27 184,200 1,760,000 3,725,000 1,944, /28 112,500 1,825,000 1,900,000 1,937, /29 38,000 1,900,000-1,938, / / / / Source: 2009B Official Statement 100

101 Napa Sanitation District Debt Service Table 5 Napa Sanitation District Revenue Certificates of Participation, Series 2012A 2.86% True Interest Cost (TIC), 20 year term $37,845,000 Fiscal Year Annual Principal Ending Total Jul 1 Interest Payment Principal Payment 2013/14 1,531,336 1,120,000 36,725,000 2,651, /15 1,323,375 1,335,000 35,390,000 2,658, /16 1,268,875 1,390,000 34,000,000 2,658, /17 1,212,175 1,445,000 32,555,000 2,657, /18 1,153,175 1,505,000 31,050,000 2,658, /19 1,091,775 1,565,000 29,485,000 2,656, /20 1,027,975 1,625,000 27,860,000 2,652, /21 961,675 1,690,000 26,170,000 2,651, /22 892,575 1,765,000 24,405,000 2,657, /23 820,675 1,830,000 22,575,000 2,650, /24 745,875 1,910,000 20,665,000 2,655, /25 667,875 1,990,000 18,675,000 2,657, /26 586,675 2,070,000 16,605,000 2,656, /27 502,275 2,150,000 14,455,000 2,652, /28 425,825 2,230,000 12,225,000 2,655, /29 357,875 2,300,000 9,925,000 2,657, /30 287,900 2,365,000 7,560,000 2,652, /31 215,900 2,435,000 5,125,000 2,650, /32 135,275 2,520,000 2,605,000 2,655, /33 45,588 2,605,000-2,650,588 Source: 2012A Official Statement 101

102 Napa Sanitation District Debt Service Summary Tables 1-5 Table 1 Table 2 Table 3 Table 4 Table SRF 2008 SRF 2008 SRF Series 2009B Series 2012A Phase I Phase II $901,376 $1,652,171 $219,444 $26,675,000 $37,845,000 Fiscal Year FY Total All Jul 1 Total Total Total Total Total Debt Service 2013/14 60,247 82,609 10,972 1,962,379 2,651,336 4,767, /15 60,247 82,609 10,972 1,960,754 2,658,375 4,772, /16 60,247 82,609 10,972 1,961,254 2,658,875 4,773, /17 60,247 82,609 10,972 1,956,779 2,657,175 4,767, /18 60,247 82,609 10,972 1,958,229 2,658,175 4,770, /19 60,247 82,609 10,972 1,953,554 2,656,775 4,764, /20 60,247 82,609 10,972 1,952,064 2,652,975 4,758, /21 60,247 82,609 10,972 1,952,518 2,651,675 4,758, /22 60,247 82,609 10,972 1,949,371 2,657,575 4,760, /23 60,247 82,609 10,972 1,947,781 2,650,675 4,752, /24-82,609 10,972 1,947,634 2,655,875 4,697, /25-82,609 10,972 1,948,431 2,657,875 4,699, /26-82,609 10,972 1,941,087 2,656,675 4,691, /27-82,609 10,972 1,944,200 2,652,275 4,690, /28-82,609 10,972 1,937,500 2,655,825 4,686, /29-82,609 10,972 1,938,000 2,657,875 4,689, / ,652,900 2,652, / ,650,900 2,650, / ,655,275 2,655, / ,650,588 2,650,

103 Appendix A Glossary of Terms 103

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105 Glossary of Terms ARRA BMPs BOD American Recovery and Reinvestment Act of 2009 Best Management Practices Biochemical Oxygen Demand CalPERS California Public Employee Retirement System CARB CASA COPs DAF CIP CPI DAF EDU EIR EIS FOG FTE FY GAAP GFOA I & I LIMS MGD MST MOU NBWRA NPDES NSH ORP OPEB California Air Resources Board California Association of Sanitation Agencies Certificates of Participation Dissolved Air Floatation Capital Improvement Plan or Capital Improvement Program Consumer Price Index Dissolved Air Flotation Equivalent Dwelling Units Environmental Impact Report Environmental Impact Statement Fats, Oils and Grease Full-Time Equivalent Fiscal Year Generally Accepted Accounting Principles Government Finance Officers Association Inflow & Infiltration Laboratory Information Management System Million Gallons per Day Milliken/Sarco/Tulocay Creeks area Memorandum of Understanding North Bay Water Reuse Authority National Pollutant Discharge Elimination System Napa State Hospital Oxygen Reduction Potential Other Post Employment Benefits 105 POTW RAS SCADA SRF SWRF TSS TIC Publically Owned Treatment Works Return Activated Sludge Supervisory Control and Data Acquisition State Revolving Fund Soscol Water Recycling Facility Total Suspended Solids True Interest Cost Acre Foot The volume of water required to cover one acre of land to a depth of one foot. One acre foot of water equals 43,460 cubic feet, or 325,851 gallons. Adjusted Budget The adopted budget, with any changes adopted by the Board of Directors during the fiscal year. Adopted Budget Financial plan and policy statement on the operating and capital programs of the District, approved by the Board of Directors in June for the subsequent fiscal year. American Recovery and Reinvestment Act of 2009 (ARRA) Also known as federal stimulus grants, these are grants from federal agencies designed to stimulate the economy and promote job creation and retention through infrastructure improvements and other projects. Appropriation An authorization made by the Board of Directors which permits officials to incur obligations against and to make expenditures of governmental resources. Biochemical Oxygen Demand (BOD) - A measure of the oxygen used by microorganisms to decompose waste. If there is a large quantity of organic waste in the wastewater supply, there will also be a lot of bacteria present working to decompose this waste. In this case, the demand for oxygen will be high (due to all the bacteria) so the BOD level will be high. As the waste is consumed or dispersed through the water, BOD levels will begin to decline.

106 Board of Directors The five public officials appointed by the City of Napa and County of Napa to set policy direction for the District. Bond Covenant A requirement placed on the District as part of a financing agreement, such as bonds. Bonds Borrowed monies allocated to pay for specific capital programs. Debt service payments are made to repay the bond holders. Budget Calendar The schedule of key dates that the District follows in preparing and adopting the budget. Budget Document The official financial spending and resource plan, adopted by the Board of Directors and made available to the public and other interested parties. Budget Transfer An appropriation for the transfer of resources from one account, department or fund to another. See also Interfund Transfer and Intrafund Transfer. California Air Resources Board (CARB) Part of the California Environmental Protection Agency, their mission is to promote public health, welfare and ecological resources through the efficient and effective reduction of air pollutants. California Public Employees Retirement System (CalPERS) A state-wide pooled trust used by local government and state agencies to fund employee retirement benefits. Consumer Price Index (CPI) A measure of inflation maintained by the U.S. Bureau of Labor Statistics. Capacity Charge One time fee charged to new connections, or to existing connections where a change in use will result in increased discharge, to pay for the sewer and treatment plant capacity allocated to them. Capacity Fee See Capacity Charge. Capital Assets Assets of significant value (over $5,000 at the time of acquisition) that have a useful life of over one year. Examples are land, buildings, other improvements, machinery, vehicles and equipment. Capital Improvement Plan The listing of capital projects by cost and fiscal year. This is the documentation of decisions made within the Capital Improvement Program. Capital project costs include all expenditures required to purchase, design, construct and/or repair new or existing capital assets. Capital Improvement Program The District s program for the acquisition, construction, or rehabilitation of its capital infrastructure. The program includes the board-approved set of projects that will result in the construction of new capital facilities, or the modification, upgrade or rehabilitation of existing facilities over a ten-year period. Capital Outlay Cash outlays that result in the acquisition of or additions to capital assets. Cash Flow Projected cash disbursements for a given period of time. Cash Flow Reserve The amount of cash necessary at the beginning of the fiscal year to ensure coverage of projected cash inflows and disbursements during the fiscal year. Certificates of Participation (COPs) A type of debt financing in which certificates are issued which represent an investor s participation in the stream of lease payments paid by the issuer. Certificates of Participation are secured by the lease payments. Voter approval is not required prior to issuance. Cogeneration The use of a heat engine or a power station to generate electricity and useful heat simultaneously. Contributed Capital Capital assets that are acquired or constructed by a third party and turned over to the District for operations, maintenance and eventual rehabilitation and replacement once completed. Most often, contributed capital is the lower lateral and sewer main infrastructure built by a developer as part of a development project. Debt Capacity The difference between the amount of debt the District has outstanding (sold and authorized) and the maximum amount of debt the District can incur within its legal, public policy and financial limitations. 106

107 Debt Service Payment of interest and repayment of principal to holders of the District s bonds and other debt instruments. Debt Service Coverage The ratio of net revenues to debt service requirements. The District is required by bond covenants to maintain a debt service coverage ratio of at least Department A major organizational unit with overall managerial responsibility for functional programs of the District. Depreciation An expense based on the expectation that an asset will gradually decline in value or have to be replaced. The cost of the asset is therefore spread out (depreciated) over the asset s useful life. The intent is to charge the Operation over the real time of its useful life. Digester an apparatus in which substances are softened or disintegrated by moisture, heat, chemical action, or the like. The District uses an anaerobic digester to treat and process biosolids. Dissolved Air Floatation (DAF) A method of removing solids from wastewater by attaching a minute air bubble to suspended solids and causing the solids to separate from the water in an upward direction. Effluent This is the outflow of water from the wastewater treatment plant after treatment. Environmental Impact Report/Environmental Impact Statement (EIR/EIS) A detailed report or statement describing and analyzing the significant environmental effects of a project and discussing ways to mitigate or avoid the effects. Equivalent Dwelling Units (EDU) A proxy for the amount of suspended solids, biochemical oxygen demand and flow that the typical residential dwelling disposes into the sewer system in a day. This is used to determine the capacity charge and annual sewer service charge for non-residential customers of the District. Expenditure The payment of an obligation from the District s cash amounts. Fats, Oils and Grease (FOG) FOG is a problem in the sewer systems, as it can cause blockages that result in sewer overflows. FOG, when collected from its source (such as a restaurant), can be used by a wastewater treatment plant to increase the volatile organic material in its digester, resulting in more methane gas used for electricity production. Fiscal Year The 12-month period to which the annual operating budget applies and at the end of which a government determines its financial position and results of its operations. The District s fiscal year runs from July 1 to June 30 of the following year. Full-Time Equivalent (FTE) The amount of time a regular, full-time employee normally works in a year. For example, a full-time employee (1 FTE) is budgeted to work 2,080 hours per year, while a 0.5 FTE is budgeted to work 1,040 hours per year. Fund An independent fiscal and accounting entity with a self-balancing set of accounts recording cash and/or other resources together with all related liabilities, obligations, reserves and equities. Fund Accounting System of accounting popular with governments and nonprofit organizations that utilizes funds to segregate accounts and activities. There is a focus on stewardship of financial resources received and expended in compliance with legal requirements. Fund Equity Fund equity, for the basis of the District s budgeting and financial planning purposes, is defined as current assets, including restricted assets, less current liabilities, excluding capitalrelated liabilities. This number is meant to represent the amount of cash that the District has available to commit to operating or capital expenses now or in the future, and is comparable to Fund Balance in governmental-type funds. Generally Accepted Accounting Principles (GAAP) Uniform standards for financial accounting and reporting. They govern the form and content of the basic financial statements of an entity. General Manager The chief executive officer of the District hired by the Board of Directors. Government Finance Officers Association (GFOA) A nonprofit professional association, serving 18,000 government finance professionals through the United States and Canada. The purpose of the GFOA is to enhance and promote the professional management of governments for the 107

108 public benefit by identifying and developing financial policies and practices and promoting them through education, training and leadership. Inflow & Infiltration (I&I) This refers to unintended sources of water that enter the sewer system, either through unauthorized connections (such as a downspout or a sump pump) or from groundwater intrusion through cracks or gaps in the sewer line. Influent Water or wastewater entering the wastewater treatment plant, or a particular stage of the treatment process. Infrastructure The components that ensure delivery of reliable, high quality services. Typical components include pipelines, pumps, basins, filtration facilities and the like. Interest Revenues derived from the investment of idle cash and/or reserves. Interfund Transfer The transfer of resources from one fund to another. See also Budget Transfer and Intrafund Transfer. Intrafund Transfer The transfer of resources from one department or account to another within a fund. See also Budget Transfer and Interfund Transfer. Laboratory Information Management System (LIMS) A software-based laboratory and information management system that offers a set of key features, including workflow and data tracking support, flexible architecture, and smart data exchange interfaces that fully support its use in a regulated environment. Lost Time The time an employee spends not working as a result of a workplace accident. Memorandum of Understanding (MOU) A document outlining the terms and details of an agreement between parties, including the responsibilities of each party. This term is often used to describe agreements with labor groups and unions. Milliken/Sarco/Tulocay Creeks (MST) The area just to the east of the City of Napa, in unincorporated Napa County, that includes Milliken Creek, Sarco Creek and Tulocay Creek. This is an area where there is a problem with groundwater overdraft. The County of Napa and the District are working together to deliver recycled water to this area. Million Gallons per Day (MGD) One million gallons per day equals 3.07 acre feet, or about 700 gallons per minute. Napa State Hospital (NSH) The District is constructing a recycled water pipeline through the NSH property. National Pollutant Discharge Elimination System (NPDES) Permit system established by the U.S. Environmental Protection Agency to regulate discharge of treated sewage, stormwater and urban runoff. The Regional Water Quality Control Board issues the District an NPDES permit that regulates the District s discharge of treated wastewater into the Napa River. North Bay Water Reuse Authority (NBWRA) This is an organization of wastewater agencies in Napa, Sonoma and Marin Counties that have joined together to develop a regional approach to funding, producing and delivering recycled water. Other Post Employment Benefits (OPEB) These are the benefits, other than retirement pensions, that are provided to retirees of the District. Governmental Accounting Standards require that benefits that accrue to employees should be expensed when they are earned, not when they are paid out to employees. The District pays into a trust account to pay for OPEB liabilities. Oxygen Reduction Potential (ORP) In wastewater, this is the measure of how much oxygen is needed to provide adequate disinfection (disinfection is provided through the application of sodium hypochlorite). The ORP analyzers are used to determine the precise amount of chemicals needed, based on changes in oxygen demand levels. This process reduces the amount of sodium hypochlorite applied during treatment to only that which is needed and reduces the amount of sodium bisulfite used to remove excess hypochlorite in the water. Performance Measure An objective measure of efficiency or effectiveness. 108

109 Publically Owned Treatment Works (POTW) For the District, this is the Soscol Water Recycling Facility (SWRF). Rates Charges for services to District customers that cover the costs of such services. Reserve A term used to indicate that a portion of fund equity is designated for a specific purpose. Resources Total dollars available for appropriations including estimated revenues and beginning fund equity. Return Activated Sludge (RAS) In the aeration process in wastewater treatment, part of the settled material, the sludge, is returned to the beginning of the aeration system to re-seed the new wastewater entering the aeration basin. The RAS Rate refers to the percentage of sludge that is returned. Revenues Monies received or earned by the District. Service Level The kind and amount of service that the District provides to its customers at a given time. Sewer Service Charges Annual or monthly fees charged to users of the District sewer works for discharges into the system. Supervisory Control and Data Acquisition (SCADA) The SCADA system is used at the Treatment Plant for the measurement and control of various processes of wastewater treatment. The system allows for some automation of processes and for the remote monitoring and control of these processes. Suspended Solids particulates dissolved in liquid. See also Total Suspended Solids. Taxes Compulsory charges levied by a government for the purpose of financing services performed for the common benefit. Total Suspended Solids (TSS) particulate weight obtained by separating particles from a water sample using a filter, usually measured as milligrams per liter (mg/l). True Interest Cost (TIC) This is the real cost of issuing a bond. It includes all ancillary fees (underwriter fees, etc.) and takes into consideration any premium payments and different interest rates paid on different bonds within a series. This number can be used to compare quotes or bids for bond issues to determine the lowest bidder. Soscol Water Recycling Facility (SWRF) This is the District s wastewater treatment plant and recycled water production facility located on Soscol Ferry Road, just north of the Napa Airport. Special District Independent unit of local government generally organized to perform a single function. State Revolving Fund (SRF) A fund administered by the state for the purpose of providing low-interest loans for investments in water and sanitation infrastructure. Struvite Ammonium magnesium phosphate (NH 4 MgPO 4 6H 2 O). Struvite is a problem in sewage and wastewater treatment, particularly after anaerobic digesters release ammonium and phosphate from waste material, as it forms a scale on lines and clogs system pipes. 109

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111 Appendix B Statistics and Economic Data 111

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113 Napa Sanitation District Demographics for City of Napa (1) Population: 72,585 78,332 Median Age: Median Household Income: $49,154 $65,217 Persons Below Poverty Level 8.9% 9.1% Median Housing Value: $238,300 $373,200 Housing Units Owner-Occupied 16,362 15,416 Renter-Occupied 10,616 12,259 Not Computed Vacant 798 2,020 27,776 30,082 Source: US Census Bureau Census Data; Census 2000 & 2012 American Community Survey 1-Year Estimates General Information for Napa Sanitation District Year of Formation: 1945 Service Area (jurisdictional): 13,292 Acres Service Population (est.): 82,700 Plant Design Capacity: 15.4 mgd (2) Connections: 36,552 Miles of Sewer: 270 miles Street Laterals: 33,000 Sewer Manholes: 5,565 On-plant pump stations: 1 Off-plant pump stations: 3 NPDES Permit Number: CA Source: Napa Sanitation District (1) Demographics are provided for the City of Napa because about 93% of the District's population resides in the City of Napa, and this data is not available specific to the District's service area. (2) MGD = Million Gallons per Day 113

114 Napa Sanitation District Historic Average Daily Influent Flow at Wastewater Treatment Plant Million Gallons per Day (MGD) Fiscal Year Ended June 30 Historic Average Daily Influent Flow at Wastewater Treatment Plant Daily Average Flow (MGD) Increase/ (Decrease) % % (38.0%) % (1.2%) % % (22.9%) (6.4%) Source: Napa Sanitation District MGD = Million Gallons per Day 114

115 Napa Sanitation District Historic Sewer System Service Connections and Equivalent Dwelling Units (EDUs) 37,000 36,000 35,000 34,000 33,000 32,000 31,000 30, Historic Sewer System Service Connections and Equivalent Dwelling Units (EDU's) Fiscal Year Ended June 30 Single Family Multifamily Commercial/ Industrial Total Connections Total EDU's ,069 7,904 3,742 33,715 35, ,221 7,934 3,766 33,921 35, ,352 7,989 3,839 34,180 35, ,598 8,066 4,011 34,675 36, ,721 8,106 4,021 34,848 39, ,085 8,193 4,183 35,461 40, ,304 8,526 4,421 36,251 40, ,368 8,482 4,439 36,289 40, ,412 8,478 4,436 36,326 40, ,486 8,539 4,527 36,552 40,320 Source: Napa Sanitation District 115

116 Napa Sanitation District Ten Largest Sewer Users $500,000 $450,000 $400,000 $350,000 $300,000 Ten Largest Users $250,000 $200,000 $150,000 $100,000 $50,000 $0 Napa State Hospital Napa Valley Unified School Distsrict Marriott Hotel Queen of County of the Valley Napa Hospital Embassy Suites Meritage Resorts Silverado Country Club Avia Hotel Napa Premium Outlets FY 2012/13 Napa State Hospital $497,310 Napa Valley Unified School Distsrict 240,608 Marriott Hotel 160,047 Queen of the Valley Hospital 140,243 County of Napa 135,941 Embassy Suites 117,257 Meritage Resorts 105,742 Silverado Country Club 64,655 Avia Hotel 56,052 Napa Premium Outlets 51,527 Total $1,569,

117 Napa Sanitation District Sewer Service Rates $500 $400 $300 $200 $100 $ Sewer Service Rates Historic Sewer Service Rates Fiscal Year Ended June 30 Sewer Service Rates % Increase 2006 $ % % % % % % % % % % In 2006, the NSD Board of Directors approved a three year phased-in increase to the sewer service rates. For FY 2007, 2008, and 2009, the District increased rates 15% per year. The rate thereafter increases with inflation. 117

118 Napa Sanitation District Sewer Service Rate for Surrounding Areas $1,000 $800 $600 $400 $200 $0 Fairfield- Suisun Sewer District City of Yountville Napa Sanitation District Vallejo Sanitation & Flood District Novato Sanitary District City of American Canyon City of Rio Vista Las Gallinas Sanitary District City of Vacaville City of Calistoga Sonoma Valley Sanitation Dist. Agency FY 2013/14 Sewer Service Rate (1) Fairfield-Suisun Sewer District $393 City of Yountville 409 Napa Sanitation District 458 Vallejo Sanitation & Flood District 507 Novato Sanitary District 514 City of American Canyon 561 City of Rio Vista 619 Las Gallinas Sanitary District 647 City of Vacaville 712 City of Calistoga 742 Sonoma Valley Sanitation Dist. 811 (1) Residential - Single Family Dwelling 118

119 Napa Sanitation District Sewer Service Revenue $20 $18 $16 $14 Millions $12 $10 $8 $6 $4 $2 $ Fiscal Year Ended June 30 Historic Sewer Service Revenues Sewer Service Revenues Percentage Change 2004 $10,298, ,192,156 (1.0)% ,421, % ,003, % ,051, % ,880, % ,089, % ,173, % ,400, % ,965, % 119

120 Napa Sanitation District Capacity Charges Past Ten Fiscal Years Revenue Collected ($Millions) $3.5 $3.0 $2.5 $2.0 $1.5 $1.0 $ # of EDU's $ Historic Capacity Charges FY Ended June 30 Capacity Charges (per EDU) Total Collected Number of EDU's 2004 $5,660 $3,063, ,660 3,396, ,660 1,773, ,660 2,637, ,660 2,867, , , , , ,660 1,339, ,000 1,425, ,000 1,516,

121 Napa Sanitation District Recycled Water Sales in Acre Feet 2,000 $1.00 1,600 RATE $0.80 Acre Feet 1, ACRE FEET $0.60 $0.40 Rate 400 $ $ Historic Annual Recycled Water Sales Calendar Year Ending December 31 Total Acre Feet QUANTITY Total Million Gallons RATES Rate per 1,000 Gallons , $ , , , , , Source: Napa Sanitation District Note: 1 Acre Feet = Million Gallons 121

122 Napa Sanitation District Recycled Water Rate for Surrounding Areas $5.00 $4.50 $4.00 $3.50 $3.00 $2.50 $2.00 $1.50 $1.00 $0.50 $0.00 City of Yountville* Delta Diablo Sanitation District Napa Sanitation District City of American Canyon** City of San Jose City of Petuluma Central Contra Costa Sanitation District North Marin Water Distsrict Dublin San Ramon Services District City of Santa Rosa* Agency Recycled Water Rates Rate per 1,000 gallons Fiscal Year City of Yountville* $0.51 FY 13/14 Delta Diablo Sanitation District $0.83 FY 13/14 Napa Sanitation District $0.98 FY 13/14 City of American Canyon** $1.20 FY 13/14 City of San Jose $2.61 FY 13/14 City of Petuluma $2.51 FY 13/14 Central Contra Costa Sanitation District $3.18 FY 13/14 North Marin Water Distsrict $4.44 FY 13/14 Dublin San Ramon Services District $4.54 FY 13/14 City of Santa Rosa* $4.79 FY 13/14 *Tier 1 Rate **Most customers are being charged this rate Please note that the rates reflected are based on consumption. Some agencies charge a fixed monthly charge in addition to the consumption charge. 122

123 Appendix C NSD Strategic Plan 123

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125 NAPA SANITATION DISTRICT Strategic Plan May

126 Napa Sanitation District Strategic Plan Table of Contents I. Introduction and Overview 1 II. NSD Recent Accomplishments 1 III. Environmental Scan 3 Current Trends, Challenges and Opportunities 3 Constituencies and Customers 5 IV. NSD Mission and Vision Statements 6 V. NSD Goals and Objectives 7 Goal One: Infrastructure Reliability 8 Goal Two: Financial Stability 9 Goal Three: Operational Capability 10 Goal Four: Employee Development 11 Goal Five: Community Outreach and Communications 12 Goal Six: Resource Recovery 13 VI. On-Going Plan Review and Monitoring 14 Attachment A. District Accomplishments for 2013 Strategic Plan (March 2013 memo from Timothy Healy, General Manager, to Board of Directors). 126

127 I. Introduction and Overview The purpose of the Strategic Plan is to describe the goals, objectives and priorities of the Napa Sanitation District (NSD). The Strategic Plan reflects the direction, insights and expertise of NSD Board of Directors and NSD staff. NSD strategic planning began in 2008 with two work sessions involving the Board of Directors and Department heads. Subsequent Board of Directors work sessions in2011 and, most recently, in March 2013, provided the forum to review and critically evaluate key components of the Planning Guide adopted by the Board in 2009, including the environmental scan, the mission and vision statements, strategic goals and objectives, and priority projects and programs. This document represents the culmination of these planning activities and discussions and provides the overall strategic direction for the Napa Sanitation District. II. NSD Recent Accomplishments Since the last update of the District s Strategic Plan in 2011, NSD has made strong progress towards achieving Board priorities. Construction projects are on schedule and under budget, bonds have been refinanced at a lower rate, and the District remains on solid financial footing. Directors specifically noted a greater atmosphere of teamwork and discipline, and open communications and feedback within and among staff and the Board of Directors. Specific achievements in recent years include: Completed construction of the fats, oil and grease (FOG) receiving station at the plant, designed to increase biogas production for use in the generation of electricity. Also development the administrative policies, operational guidelines and a fee structure for the FOG receiving station. Three completed studies analyzing the impact of the proposed Napa Pipe on the collection and recycled water systems and the wastewater treatment plant. Update of the District s Financial Master Plan and incorporation into the budget document. Completed construction of the recycled water pipeline extension north through Napa State Hospital and east along Imola Avenue to Skyline Park. Worked closely with Napa County on the design, engineering, financing and public outreach for the recycled water pipeline extension in the MST area. Completion of a study related to the provision of recycled water, providing recommendations about how to calculate the rate for recycled water following expiration of the current user agreement (October 2015). Rehabilitation of over 2 miles of sewer main and associated laterals to reduce inflow and infiltration into the sewer system. Napa Sanitation District March 2013 Strategic Plan 127 Page 1

128 A complete evaluation of the existing computer systems used to inventory and assess the condition of the District s capital assets, with a positive valuation. Developed an in-house capacity for lining lower laterals, greatly reducing the time and effort necessary to replace laterals and improving customer experience. Implementation of the action plan that resulted from the Fall 2010 employee survey and completion of a second employee survey in Fall Complete redesign of the NSD website with new and improved content, and conversion to the County s content management system. Completion (in May 2013) of the new Administration Building and Corporation Yard. Development of an ongoing customer satisfaction survey program for plug-up calls and cleanout installations. Conversion of the District s existing ordinances into a current, active District Code. NSD remains on clear track to achieve many of the longer-term priorities identified in 2011, including but not limited to implementation of Wastewater Treatment Plant Master Plan critical projects, completion of SCADA Phase 4 ugrades and implementation of several Best Management Practices aimed at pollution prevention. A memo to the District Board of Directors detailing recent accomplishments outside of the Board s priority goals is also included as Attachment A of this Plan. Napa Sanitation District March 2013 Strategic Plan 128 Page 2

129 III. Environmental Scan CURRENT TRENDS, CHALLENGES AND OPPORTUNITIES Board members identified a myriad of issues, challenges and opportunities facing NSD as it looks to the future. This section includes items identified in 2013, as well as items identified in recent years that remain most relevant to NSD s work today. Wastewater Treatment System Increasing development activity, a trend towards more vertical development, and resulting pressure on NSD s system Recognizing and understanding treatment plant vulnerabilities, determining the level of acceptable risk and developing contingency plans and appropriate messages and responses Integrating winery waste into the NSD waste systems infrastructure Addressing aging infrastructure: maintenance and replacement of lines and equipment Increasing the capture of resources for beneficial reuse Maintaining compliance with all environmental regulations Understanding the potential impact of Constituents of Emerging Concern (CECs), such as endocrine disrupters, on the treatment process and potential regulatory requirements Updating the long-term system master plans NSD Recycled Water Services Increasing demand for recycled water Expanding use of recycled water Change in regulatory restrictions Continuing high cost of producing recycled water Continuing development of the NSD wastewater recycling program Determining how to best serve the Milliken-Sarco-Tulocay (MST) area Determining how to best serve the Carneros area Customer Service Providing excellent customer service Providing excellent plan checking services Understanding our new role as water purveyor Resource Stewardship and Efficiencies An increasing focus on water quality and nutrient removal Redefining waste as a resource that society has not figured out how to use Addressing depletion of the MST aquifer Utilizing cost-effective green energy Maximizing energy efficiency and conservation Napa Sanitation District March 2013 Strategic Plan 129 Page 3

130 Understanding how peak oil may affect NSD operations Exploring opportunities to utilize renewable energy sources Facilities and Operations Managing extensive new construction Building in resiliency to allow for future unknowns Continuing impact of technology on NSD operations (being aware of what we know and the unknown) Meeting all regulatory standards now and in the future Considering the potential impact of rising sea levels on District operations Human Resources and Employee Development Creating guidelines for the organizational pay structure Creating a long-term, sustainable plan for medical and retirement benefits Developing a succession plan and having the back-up staff in place who are cross-trained and ready to take on new assignments if necessary Getting the right skilled people Maintaining an emphasis on safety Maintaining good labor and management relations Organization, Budget and Finance Determining future staffing structure and needs Maintaining a solid financial footing Creating a performance-based budget Managing the conflict between political process and financial stability Balancing low rates against future needs Keeping costs under control Staying on top of budget and financial matters and living within our means Being able to control our own destiny by being economically self-sufficient and prepared for any contingency Forming partnerships with other agencies to share resources, etc. Setting clear priorities Realizing that existing NSD management capacity limits the organization s ability to take on too many new projects Acquiring the data and information needed to make sound decisions with regard to future capital projects Advocating for sound policies at the regional, state and federal levels Public Engagement, Attitudes and Perception Creating a strategic approach to community outreach Developing key messages for NSD Dedicating additional financial resources to community outreach Napa Sanitation District March 2013 Strategic Plan 130 Page 4

131 Communicating the rationale for the new building and corporate yard Clearly communicating complex topics including the establishment of service and recycled water rates Addressing the increasing public skepticism about government in general Continuing need to make all aspects of the District transparent to the public NSD CONSTITUENCIES AND CUSTOMERS The Board identified NSD s core stakeholders and broadly discussed their importance and the role they play in NSD decision-making and operations. Stakeholders Stakeholder Needs and Stakeholder Contributions Expectations A. Regulators Regulatory compliance Regulatory requirements and guidelines B. Ratepayers Fair, equitable rates and Fees transparency C. Agencies Collaboration and partnership Technical information and support D. Policy-Makers Top performance and transparency Policy direction Napa Sanitation District March 2013 Strategic Plan 131 Page 5

132 IV. NSD Mission and Vision Statements Board members established the following NSD Mission, Vision and Value statements: Mission Statement The mission of NSD is to collect, treat, beneficially reuse and dispose of wastewater in an effective and fiscally responsible manner that respects the environment, maintains the public s health and meets or exceeds all local, state and federal regulations. Mission Statement (Condensed) NSD s primary function is the collection, treatment, disposal and/or reuse of wastewater. Another way to describe the NSD mission in a more colloquial, less formal sense is as follows: NSD s core business is wastewater we collect it, treat it, dispose of and/or reuse it! NSD extracts and recovers resources where feasible. The underlying goal is to view waste as something that has not yet been put to beneficial reuse. Vision Statement NSD will provide consistently reliable service to its customers in its management of Napa s critical water resources, and will remain in full compliance with all applicable regulations while anticipating and preparing for future challenges. Board members coined the phrase managing risks intelligently, referring to the process whereby NSD provides articulated levels of service at an acceptable level of risk at the lowest life cycle cost. The above vision statement encompasses this key idea. Values NSD staff and Board members adhere to a set of core values in all aspects of District operations: Safety Fiscal Responsibility Environmental Stewardship Quality Customer Service Transparency Vigorous Dialog and Critical Analysis Pragmatism Professional Excellence Fairness Napa Sanitation District March 2013 Strategic Plan 132 Page 6

133 V. NSD Goals and Objectives The NSD Strategic Plan is organized according to six major goal areas: Goal One: Goal Two: Infrastructure Reliability Financial Stability Goal Three: Operational Capability Goal Four: Goal Five: Goal Six: Employee Development Community Outreach and Communications Resource Recovery The goal areas represent Board members overall top priorities. Within each goal area, Board members identified their top priority projects and programs which are summarized on the following pages. Napa Sanitation District March 2013 Strategic Plan 133 Page 7

134 GOAL ONE: INFRASTRUCTURE RELIABILITY Build, maintain and operate a cost-effective and reliable wastewater treatment system for the NSD service area. Systematic replacement of NSD s aging infrastructure is priority number one. A long term capital facilities plan is needed, drawing on accurate information about current facility conditions and projections of future service area needs: five, ten or more years from now. NSD must ensure that treatment capacity will be in place to address current and projected future needs. The NSD Board established the following key objectives: 1A. Implement Wastewater Treatment Plant Master Plan critical projects: Pond Aeration RW Filters, Secondary Equalization and DAF Clarifier Influent Pump Station Complete by December 31, B. Wet Weather Inflow/Infiltration Cost/Benefit analysis Complete by December 31, C. Complete SCADA master plan implementation Complete Phase 4 by October 31, 2013 Napa Sanitation District March 2013 Strategic Plan 134 Page 8

135 GOAL TWO: FINANCIAL STABILITY Ensure adequate fiscal resources to fulfill NSD s mission. The NSD Board has a fiduciary responsibility to ensure that adequate financial resources are in place to operate the District and carry out its mission. The NSD Board established the following key objectives: 2A. Develop non-rate, revenue-generating or expense minimizing opportunities that fit within the District s mission, either on its own or through private/public partnership. Ongoing 2B. Conduct study of plan check/inspection fees and methodology options for calculating and assessing capacity charges, and make recommendation for improvement. Complete by June 30, C. Prepare a presentation to the Board providing background materials and policy choices regarding long-term strategies and goals for replacement of sewers. Complete by January 31, D. Conduct a Sewer Service Charge fee study prior to the next Proposition 218 hearing. Complete by February 29, 2016 Napa Sanitation District March 2013 Strategic Plan 135 Page 9

136 GOAL THREE: OPERATIONAL CAPABILITY Implement and maintain effective operational practices. The NSD Board wants to operate a District at or above best practices, utilizing proven technology. Customers, ratepayers and internal staff all deserve high quality service. The NSD Board established the following key objectives: 3A. Prepare safety and security vulnerabilities study and public communications plan. Complete by July 31, B. Develop policy and programs regarding the impact of wineries based on the 2009 Winery Study. Complete by December 31, 2013 Napa Sanitation District March 2013 Strategic Plan 136 Page 10

137 GOAL FOUR: EMPLOYEE DEVELOPMENT Maintain a dynamic and skilled workforce through employee engagement, professional development and opportunities for advancement The NSD Board wants to create a positive and respectful working environment that encourages all employees to do the best job possible for the ratepayers of the District. The NSD Board established the following key objectives: 4A. Develop a management succession plan and identify and train back-up staff for all mission-critical positions. Implement plans and complete training by December 31, B. Conduct third employee survey in Fall Complete by March 31, C. Develop a transition plan for the new administrative building, to address issues identified during and after the move. Complete by December 31, D. Create an employee master plan. Complete by June 30, E. Prepare for and complete MOU negotiations. Complete by June 30, 2014 Napa Sanitation District March 2013 Strategic Plan 137 Page 11

138 GOAL FIVE: COMMUNITY OUTREACH AND COMMUNICATION Provide ratepayers with the information they need to understand NSD mission, operations, finances and rate structures. The NSD Board wants to ensure that NSD operates in a transparent manner and serves as a resource to all ratepayers of the service area. The NSD Board established the following key objectives: 5A. Be proactive in developing partnerships with local businesses and other public agencies to achieve efficiencies and common goals. Focus on accomplishments. Ongoing 5B. Create a communications plan to address NSD outreach and public information needs. Complete by September 30, 2015 Napa Sanitation District March 2013 Strategic Plan 138 Page 12

139 GOAL SIX: RESOURCE RECOVERY Implement policies and technologies to recover resources from wastewater for beneficial reuse. The NSD Board wants to recover resources for reuse when economically viable and a market exists for their beneficial reuse. NSD must also use the resources available to ensure a reliable energy supply during emergency conditions as well as during normal times. The NSD Board established the following key objectives: 6A. Implement capital projects in partnership with local agencies for the distribution of recycled water. Complete by December 31, B. Study the feasibility of expanding system storage capacity for recycled water. Complete by June 30, C. Set a target for the percentage of energy used by the District that is selfgenerated, and set long-term strategies for achieving that percentage. Set target by June 30, D. Explore the possible beneficial reuse of algae. Report to the Board by December 31, 2016 Napa Sanitation District March 2013 Strategic Plan 139 Page 13

140 VI. On- Going Plan Review and Monitoring Board members and staff agree that the Quarterly Report of Priority Goals will be updated with the new goals and objectives in this Strategic Plan, with quarterly reporting continuing in a similar fashion. Board members will receive presentations by NSD staff members on key topics (such as infrastructure and capital needs) to explore top priorities in more depth, as needed or requested by the Board. Napa Sanitation District March 2013 Strategic Plan 140 Page 14

141 Appendix D Financial Policies 141

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143 NAPA SANITATION DISTRICT FINANCIAL POLICIES Approved by the Board of Directors May 2,

144 NAPA SANITATION DISTRICT FINANCIAL POLICIES 144

145 NAPA SANITATION DISTRICT FINANCIAL POLICIES Table of Contents 1. General Policies Review annually 1.2. Comply with applicable laws 1.3. Administrative procedures 2. Reserves Reviewed annually 2.2. Operating reserve 2.3. Liquidity 3. Revenue Fees and Charges Setting of Fee and Charge Amounts Collection of Fees and Charges Review of Fees 3.2. Revenue Forecasting 3.3. Use of one-time and unpredictable revenues 4. Budgeting and Capital Asset Management Basis of budgeting 4.2. Balanced budget 4.3. Budget control 4.4. Capital asset acquisition, maintenance, replacement and retirement Budget for maintenance Use of operational fund balance for capital Capitalization threshold Ten-year Capital Improvement Plan Funding requirement 5. Debt Issuance and Management Use of long-term debt 5.2. Length of debt obligations 5.3. Debt service limitation 5.4. Use of credit enhancements 5.5. Bond rating 5.6. Financial disclosure page

146 NAPA SANITATION DISTRICT FINANCIAL POLICIES 6. Investments Investment policy 6.2. Annual review 7. Financial Reporting Quarterly Financial Reporting to Board of Directors 7.2. Monthly Financial Reporting to the Board of Directors 7.3. Monthly Management Report review 8. Accounting Financial statements 8.2. Annual financial audit 8.3. Accounting policies and procedures page

147 NAPA SANITATION DISTRICT FINANCIAL POLICIES 1.0 GENERAL POLICIES 1.1 Review annually Napa Sanitation District s financial policies shall be reviewed annually by the Board and shall be published in the adopted budget. 1.2 Comply with applicable laws The District shall comply with all applicable state and federal laws and regulations concerning financial management and reporting, budgeting, investing and debt administration. 1.3 Administrative procedures The Chief Financial Officer shall establish and maintain appropriate financial and internal control procedures to assure the integrity of the District s finances page

148 NAPA SANITATION DISTRICT FINANCIAL POLICIES 2.0 RESERVE POLICIES 2.1 Reviewed annually Napa Sanitation District shall maintain reserves that are appropriate to the needs of the District. Targeted reserve levels shall be established and reviewed annually as part of the budget process. The use of fund balance or reserves for operational activities shall be explained in the annual budget document; such explanation shall describe the circumstances for such action and its expected future impact. 2.2 Operating reserves Napa Sanitation District shall maintain an operating reserve for use during operational or financial emergencies. Emergencies shall constitute significant, unforeseen events that have a dramatic and immediate impact on the operations, assets or financial condition of the District. A plan to replenish this reserve used during a fiscal year shall be developed and approved through the budgeting process in the following fiscal year. The amount of the reserve shall be at least equal to 15% of the budgeted annual operating expenses, excluding debt service, in the General Operations and Maintenance Fund. 2.3 Liquidity Napa Sanitation District shall maintain cash and investments necessary to meet the liquidity needs for the District. Furthermore, the District shall maintain unrestricted cash and investments as required by any debt covenants. Liquidity needs shall be calculated as follows: on June 30th of each year the District shall maintain a level of cash and investments, less those amounts held in reserve by a fiscal agent, in an amount at least equal to anticipated operating expenditures between July 1 and November 30, plus the amount held in Operating Reserve page

149 NAPA SANITATION DISTRICT FINANCIAL POLICIES 3.0 REVENUE 3.1 Fees and Charges Setting of Fee and Charge Amounts Fees and charges shall be set to recover the current operational needs of the District, including the financing of capital improvements in accordance with the Capital Improvement Program Collection of Fees and Charges The District shall strive to collect all fees and charges imposed, and shall actively pursue and settle delinquent accounts Review of Fees The District shall review fees and charges annually to ensure they are set at appropriate amounts. 3.2 Revenue Forecasting The District shall estimate revenues conservatively, through an objective, analytical process. The District shall regularly report on forecasted vs. actual revenues, and provide explanation for significant variances. 3.3 Use of one-time and unpredictable revenues One-time revenues shall be used to support one-time expenditures or increase fund balance. Unpredictable revenues shall not be used to support ongoing operational expenses for a period longer than the revenue can reasonably be expected to support them page

150 NAPA SANITATION DISTRICT FINANCIAL POLICIES 4. BUDGETING AND CAPITAL ASSET MANAGEMENT 4.1 Basis of budgeting All budgetary procedures will conform to state regulations and generally accepted accounting principles. As such, the District shall use a modified accrual basis of accounting for reporting on budgeted versus actual expenditures, with the following exceptions: Grant revenues are budgeted on a modified cash basis rather than an accrual basis; Fixed assets are depreciated for some financial reporting, but are fully expensed in the year acquired for budgetary purposes; 4.2 Balanced budget The District shall maintain a balanced budget, defined as total resources (operating revenue, non-operating revenue, intrafund transfers and beginning fund equity) shall equal total requirements (operating expenses, capital expenses, intrafund transfers and ending fund equity) including contingencies. Furthermore, the District considers the budget to be balanced whenever annual operating and nonoperating revenues meet or exceed annual operational expenditures. The District is committed to maintaining a balanced budget under normal circumstances and will disclose deviations from a balanced operating budget when it occurs. 4.3 Budget control The Board of Directors retains the exclusive authority to increase annual budget authority for Operational Expenditures. In no case may total operating expenditures exceed that which is appropriated by the Board without a budget amendment duly approved by the Board. The Board of Directors also retains the exclusive authority to increase the annual budget authority for Capital Expenditures. In no case may total capital expenditures exceed that which is appropriated by the Board without a budget amendment duly approved by the Board. Only the Board may authorize transfer of budget authority between Operational Expenditures and Capital Expenditures. Only the Board may increase the number of authorized positions in the Position Control Roster. The General Manager has the authority to approve budget transfers between operating departments. The General Manager has the authority to approve budget page

151 NAPA SANITATION DISTRICT FINANCIAL POLICIES transfers between capital projects. The General Manager has the authority to hire employees in accordance with the Position Control Roster. The Director of Administrative Services / Chief Financial Officer shall be responsible for establishing a budgetary control system to ensure compliance with this policy. 4.4 Capital asset acquisition, maintenance, replacement and retirement Budget for maintenance The District shall budget for the adequate maintenance of capital equipment and facilities to protect the public investment and ensure achievement of their maximum useful life Use of operational fund balance for capital Operational fund balances in excess of established reserves and liquidity requirements shall be used for the development, rehabilitation or replacement of capital assets Capitalization threshold An asset shall be considered a capital asset when the initial cost of the asset is $5,000 or more and has a useful life of more than one year. The initial cost shall include any costs necessary to put the asset into its intended use. Interest in real property shall always be considered a capital asset, regardless of its initial cost Ten-year Capital Improvement Plan The District shall prepare, adopt and update annually a ten-year Capital Improvement Plan that identifies and sets priorities for all major capital assets to be acquired, constructed or replaced by the District. The Capital Improvement Plan shall be included in the Adopted Budget. Major capital assets are those which result in a capitalized asset costing more than $50,000. Capital assets costing less than $50,000 may be combined into a single major capital project for Ten-year Capital Improvement Plan purposes, with the individual capital assets identified page

152 NAPA SANITATION DISTRICT FINANCIAL POLICIES Funding requirement The Capital Improvement Plan shall identify adequate funding to support the acquisition, construction and replacement of assets identified in the plan, and shall identify projects that the District believes beneficial to the system but funding has not yet been identified. Additionally, the District shall strive to develop a comprehensive strategy and funding plan for the renewal and replacement of existing capital assets page

153 NAPA SANITATION DISTRICT FINANCIAL POLICIES 5. DEBT ISSUANCE AND MANAGEMENT 5.1 Use of long-term debt The District shall have a preference to finance capital improvements using pay-asyou-go financing and shall issue long-term debt only to finance capital improvements that cannot be readily financed from current revenues. Some exceptions to this may be made on a case-by-case basis for no-interest and extremely-low-interest loan programs for capital projects. Debt financing shall be used only for major, non-recurring items or improvements with a minimum of five years of useful life; assets with a shorter useful life shall be financed using pay-as-you-go financing. 5.2 Length of debt obligations The District shall repay all debt issued within a period not to exceed the expected useful life of the improvements financed by the debt. 5.3 Debt service limitation The District shall not issue debt where the debt service amounts exceed its ability to pay current obligations from current revenues. This shall be calculated as follows: current operating revenues, less current operating expenditures, shall be at least 125% of anticipated total annual debt service for all outstanding long-term debt. 5.4 Use of credit enhancements When issuing long-term debt, credit enhancements (letters of credit, bond insurance, etc.) may be used, but only when net debt service on the debt is reduced by more than the cost of the enhancement. 5.5 Bond rating The District shall seek to maintain and, if possible, improve its current bond rating in order to minimize borrowing costs and preserve access to credit. 5.6 Financial disclosure The District shall fully disclose financial and pertinent credit information as it relates to the District s outstanding securities page

154 NAPA SANITATION DISTRICT FINANCIAL POLICIES 6. INVESTMENTS 6.1 Investment policy The District shall maintain the same investment policy as the County of Napa and shall invest its cash reserves in the County s investment pool. 6.2 Annual review The District shall review this policy annually and advise the Board when, in the professional opinion of the staff, it would be prudent to consider alternatives to investing its cash reserves page

155 NAPA SANITATION DISTRICT FINANCIAL POLICIES 7. FINANCIAL REPORTING 7.1 Quarterly financial reporting to Board of Directors The District shall prepare and provide to the Board of Directors a quarterly summary report that compares actual revenues and expenditures to budgeted amounts. The report shall explain significant variances and provide analysis and interpretation of financial information. 7.2 Monthly financial reporting to Board of Directors On a monthly basis, the Board of Directors shall be provided a financial report that includes budget-to-actual financial reporting and calculation of existing cash balances. The Board shall also receive regularly a report listing payments made to vendors during the reporting period. 7.3 Monthly management report review The District shall prepare a monthly report for review and use by District management staff that compares actual revenues and expenditures to budgeted amounts, as well as additional reports as requested to assist in managing the day-today operations of the District page

156 NAPA SANITATION DISTRICT FINANCIAL POLICIES 8. ACCOUNTING 8.1 Financial statements The District shall prepare financial statements annually, in accordance with generally accepted accounting principals for governments in the United States. 8.2 Annual financial audit The District s financial statements shall be audited annually by an independent, qualified third party in accordance with generally accepted auditing standards, and shall complete the audit within eight months of the end of the fiscal year. The audit results and any associated management response shall be presented to the Board of Directors. 8.3 Accounting policies and procedures Management shall develop internal accounting policies and procedures necessary to implement these Financial Policies and to ensure that internal controls, processes and procedures are adequate to protect the finances of the District page

157 Appendix E 2013 Performance Measurement Report 157

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159 Performance Measurement Report Performance Measurements for the Napa Sanitation District Using the Effective Utility Management Framework Includes Data and Analysis for Calendar Year 2013 Issue Date: April 16,

160 160 2 Page

161 Table of Contents Table of Contents...3 Introduction...5 Executive Summary...7 Summary of Measures and Ratings...10 Performance Measurement Report Product Quality Customer Service Employee and Leadership Development Operational Optimization Financial Viability Infrastructure Stability Operational Resiliency Community Sustainability Water Resource Adequacy Stakeholder Understanding & Support Page

162 More information about the Napa Sanitation District can be found at Page

163 Introduction Introduction to the Report This report is the fourth annual report by the Napa Sanitation District regarding the performance of the District. It includes performance measures that, when taken as a whole, should give the reader a sense of how well the utility is performing and being managed. This report is prepared by management for use by the District s Board of Directors and by the general public. The District has chosen to use the Effective Utility Management (EUM) framework for presenting this information. This framework is specific to water and wastewater utilities and provides for the possibility of comparing the District to other wastewater utilities once more providers begin using EUM for measuring and reporting on performance. About Effective Utility Management Effective Utility Management (EUM) is a framework for evaluating water and wastewater utilities. In May 2007, six major water and wastewater associations and the United States Environmental Protection Agency (EPA) agreed to support EUM collectively and individually throughout the water sector. EUM is designed to help utility managers make practical, systematic changes to achieve excellence in utility performance, and encapsulates the collective knowledge and experience of utilities leaders who are committed to helping improve water and wastewater management. EUM has identified Ten Attributes of Effectively Managed Water Sector Utilities. This performance measurement report has been divided into those ten attributes, as they are intended to help utilities maintain a balanced focus on all important operational areas rather than quickly moving from one problem to the next. More can be learned about Effective Utility Management by visiting the website About Performance Measures Performance measures are those things that are measured by an organization to evaluate the performance of that organization. There are several types of measures, including input, output, efficiency and effectiveness. Input and output measures tend only to capture the amount of work performed by departments or organizations. This report focuses on efficiency and effectiveness measures, and then only Page

164 on the measures that are meaningful to management of the District and that the District has some ability (total or partial) to influence. Quick-Glance Ratings This report includes with every measure an analysis of how the District is doing within that area. Additionally, next to each graph or qualitative measure is an icon to help the reader assess quickly how the District is performing against that measure. Those icons are as follows: Satisfactory (green star) signifies that the District has met its goals, or that the trend is positive. Watch (orange diamond) signifies that the District is in danger of not meeting its goals, that the trend is indeterminate, or that there is insufficient data to make an assessment. Unsatisfactory (red triangle) signifies that the District has not met its goals or that the trend is negative. No Measure (blue circle with slash) signifies that the District has not developed a measurement for this performance indicator Page

165 Executive Summary This report is the fourth annual Performance Measurement Report produced by the Napa Sanitation District. The report is structured around the Ten Attributes of Effectively Managed Water Sector Utilities, as developed in Effective Utility Management. This report will be used by management of the District to identify specific trends or issues regarding the ten attributes. The Report is also intended to provide a partial answer to the question asked by the Board of Directors and the ratepayers alike, Is the Napa Sanitation District a well run utility? This document will be used by the District s Board of Directors as a source of information for setting District goals and priorities through its strategic planning and annual budget processes. The following is a summary of performance measurements reported in this report. Product Quality The District continues to meet or exceed regulatory compliance requirements at the wastewater treatment plant. Sanitary Sewer Overflows are few, with both the number and volume of spills well below the state average. The trend line for the number of plugged main lines is down, and the availability of recycled water is good. Recycled water reuse by customers met the targeted goal of 60%. Beneficial reuse of biosolids was at 100% last year. Customer Service The reduction in the number of service calls due to District causes should result in more satisfied customers. The customer service surveys began in 2010 appear to support this, but more data is still needed. The District met its stated customer service response time goals for development review and for collection system service calls, but the trend in the collection system is negative, putting that measure on watch. Employee and Leadership Development Retirements have been as anticipated, with an average of about 5% experience turnover rate annually for the last five years. There was no employee survey in 2012 or 2013 to update employee opinions. The limited measures on training indicate there is steady performance in some training categories, and that employees are generally meeting their safety training targets. The District has drafted several succession plans for key positions that were finalized in 2013, and training programs are in place to capture collection system and operations knowledge, leading to an upgrade in the rating for succession planning to satisfactory. Operational Optimization Over the past decade, the plant has reduced its consumption of electricity overall, as well as its use per million gallons treated. Its self-produced electricity is also at historic highs, with an increase to almost 40% due to the acceptance of fats, oil and grease at the Page

166 new FOG receiving station. Chemical consumption per million gallons treated is continues to be low, although 2013 saw a small increase from prior years. Financial Viability The ratio of revenue-to-expenditure has trended to zero in recent years, evidencing financial stability. The ratio of capital expenditures is at a sustainable level, and the debt service coverage ratio is significantly higher than the required 125%. The District maintains adequate policies and internal controls, and the District s bond rating remains high, even with the issuance of new debt in The sewer service charge rate is pegged to CPI, and is now evaluated annually for its ability to cover life-cycle cost of service and capital funding options. The District s reserves are funded in accordance with financial policies. Infrastructure Stability While the District has not performed an inventory of critical assets in the past 5 years, it does maintain computerbased asset and condition information of its collection system and most components of the Soscol Water Recycling Facility. The District has also maintained its goals related to annual sewer main line condition assessments. The District has been spending adequately on renewal & replacement projects to meet minimum standards and targets (percentage of total assets). There is still too little data to make determinations on whether the amount of sewer main line and lower lateral replacements are adequate; this is an area the District could spend more time evaluating and developing internal goals. The District is performing very well regarding collection system failure rates. Planned maintenance as a percentage of total maintenance is high at the plant and in the collection system. District inspections of restaurant to help prevent fats, oil and grease (FOG) problems in the collection system increased in 2012 and 2013, with the District meeting its stated goal of 100% inspections in 2013, thus earning an increased rating from unsatisfactory to satisfactory. During the past six years, collection staff has met its goal of cleaning the equivalent of 40% of main lines annually. Operational Resiliency The District s total recordable incidence rate has met or exceeded the industry standard for several years. For six of the past ten calendar years, the District has been lost time accident free, with lost time in the two of those years being very low. Insurance claims have been rising in the past 4 years, with more claims in FY 12/13 than in any of the previous 9 years, putting this measure on the watch list. The overall severity/expense of the claims, however, has remained relatively low. The District s Experience Modification Rate (a measure of the quantity and severity of workers compensation claims) has gone down steadily since FY 04 and remains below both the industry average and the CSRMA average. The District maintains adequate Emergency Response Plans and practices them regularly. The cogeneration engine has Page

167 recovered from a recent downward trend in reliability, with the only significant downtime due to planned preventive maintenance and 2013 reaching over 98% uptime. The IPS pumps had problems with uptime in the past three years, highlighting an overall resiliency problem with the Influent Pump Station. Community Sustainability The District has invested in meeting community needs, particularly with recycled water. The District is involved in several community programs that encourage reduced potable water consumption and environmental protection and awareness, and has incorporated green practices into its capital planning. Greenhouse gas emissions from purchased natural gas, in the form of carbon dioxide, has seen a decrease in recent years, with more digester gas used to produce power rather than flared than ever before. As for service affordability, sewer service charges are still significantly below the EPA threshold for affordability. The Low Income Assistance Program saw an increase in the number of properties included in the program in FY12 and FY13. Water Resource Adequacy This attribute, reinterpreted as a measure of recycled water adequacy, shows that the District has sufficient short-term adequacy to meet customer needs. The current water supply of 2,000 acre-feet is slightly overcommitted, although some of the demand has yet to be developed, and this problem will be resolved with the current construction project to expand the recycled water filter capacity. Long term, there are more potential customers identified than water potentially available. Stakeholder Understanding and Support While the District has sought out customer input and engagement on various projects recently, there has not been an evaluation of stakeholder satisfaction or whether stakeholder input has been beneficial. The District s sewer service charges compare favorably to other provider s rates, but have dropped rapidly in the last four years indicating a potential inadequacy of the District s rates that should be watched. Media coverage for the District was adequate in terms of amount, and saw small increases in both the coverage tone and accuracy this past year Page

168 Summary of Measures and Ratings More information about the specific measures and the rationale for the ratings can be found on the page number provided. Satisfactory Watch Unsatisfactory No Measure Attribute Product Quality Customer Service Employee and Leadership Development Operational Optimization Financial Viability Measurement 2012 Rating 2013 Rating Page Treatment for BOD and TSS Removal 15 Total Allowable BOD and TSS 15 Sanitary Sewer Overflows (SSOs) 16 Volume of Sewage Overflow 16 Plugged Main Lines 17 Recycled Water Service Availability 17 Recycled Water Reuse by Customers 18 Biosolids Put to Beneficial Reuse 19 Service Calls for District Plugged Laterals 20 Service Call Response Time 20 Development Review Response Time 21 Customer Satisfaction 22 Experience Turnover Rate 23 Employee Survey Response 24 Total Training Hours 25 Online Safety Training Hours 25 Succession Planning 26 Electricity Consumption by Source 27 Electricity Consumption Efficiency 27 Chemical Consumption 28 Revenue-to-Expenditure Ratio 30 Capital Expenses Compared to Operating 30 Expenses Debt Service Coverage Ratio 31 Financial Procedure Integrity 32 Bond Rating 32 Sewer Service Charges Compared to 33 Inflation Rates Based on Life-cycle Cost 33 Rate Stabilization Reserve Page 168

169 Satisfactory Watch Unsatisfactory No Measure Attribute Infrastructure Stability Operational Resiliency Community Sustainability Water Resource Adequacy Stakeholder Understanding & Support Measurement 2012 Rating 2013 Rating Page Asset Inventory 35 Sewer Main Condition Assessment 35 Renewal & Replacement of Assets 36 Sewer Main Renewal and Replacement 36 Lower Sewer Lateral Renewal and 37 Replacement Collection System Failure Rate 37 Plant Planned Maintenance Ratio 38 Sewer Main Line Cleaning 38 Collections Planned Maintenance Ratio 39 Pollution Prevention Inspections 39 Total Recordable Incident Rate 41 Lost Time Hours 41 Number of Insurance Claims 42 Severity of Insurance Claims 42 Experience Modification (XMOD) Rate 43 Emergency Response Plans in Place 43 Frequency of ERP trainings 44 Uptime for Cogeneration Engine 44 Uptime for Pumps at IPS 45 Power Resiliency 45 Critical Parts and Equipment Resiliency 46 Critical Staff Resiliency 47 Treatment Operations Resiliency 47 Watershed-based Infrastructure 49 Planning Green Infrastructure Approaches 49 Carbon Dioxide Emissions 51 Digester Gas Beneficial Reuse 51 SSC Bill Affordability 52 Low Income Billing Assistance 53 Short-term Water Supply Adequacy 54 Long-term Water Supply Adequacy 55 Stakeholder Consultation 56 Stakeholder Satisfaction 57 Internal Benefits from Stakeholder Input 57 Comparative Rate Rank 57 Media/Press Coverage Page 169

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173 EUM Attribute #1: Product Quality 1. Product Quality Regulatory Compliance Product Quality Regulatory Compliance measures the extent to which the District is in compliance with the Federal Water Pollution Control Act (a.k.a., the Clean Water Act), state statutes and the District s permit under the National Pollutant Discharge Elimination System (NPDES). Treatment for BOD and TSS Removal: The District is required under its NPDES permit to remove at least 85% of the biochemical oxygen demand (BOD) and total suspended solids (TSS) from the water received at the plant during the river discharge period (winter months). The chart shows the average monthly removal percentages for both BOD and TSS. The monthly average percentage removal must remain higher than 85% to stay in compliance with the permit. 100% 95% 90% Removal of BOD and TSS % removed - monthly average BOD TSS Min 85% 80% na na 1/2004 1/2005 1/2006 1/2007 1/2008 1/2009 1/2010 1/2011 1/2012 1/2013 Analysis: For the past 8 years reported here, the District has remained in compliance with this NPDES Permit requirement for the percentage removal of BOD and TSS. The District consistently removes over 93%, and in recent years over 95% of these constituents from the influent during the months when the District discharges to the Napa River. Total Allowable BOD and TSS: The District is required under its NPDES permit to remove biochemical oxygen demand (BOD) and total suspended solids (TSS) in its process so that the effluent to the river during the winter months does not exceed 30 mg/l of either Page

174 BOD and TSS in Effluent mg/l discharged (winter only) BOD TSS Max 10 0 na na 1/2004 1/2005 1/2006 1/2007 1/2008 1/2009 1/2010 1/2011 1/2012 1/2013 Analysis: For the past 7 years reported here, the District has remained in compliance with this NPDES Permit requirement for the total allowable BOD and TSS in its effluent discharge to the Napa River. Sanitary Sewer Overflows (SSOs): The District s goal is to maintain the sewer collection system so that there are no SSOs. Especially important is to prevent overflows that reach a creek, river or other body of water, or overflows that reach a storm drain and were not fully recovered, both of which are considered Category 1 SSOs. While the overall goal is to prevent all overflows, the operational goal of the District is to have fewer overflows than the industry average in California. 1.5 Category 1 Sanitary Sewer Overflows (SSOs) # of SSOs per 100 miles of sewer NSD CA Average na na na Analysis: For the past several years, there have not been very many Category 1 SSOs in the collection system, and consistently fewer than the California state average. In 2013, there were no Category 1 SSOs in the District. Volume of Sewage Overflow: It is the District s goal to prevent Sanitary Sewer Overflows. However, when an SSO occurs, the District strives to respond quickly to prevent as much spillage as Page

175 possible. This measure is the volume of sewage spilled as a Category 1 SSO per 100 miles of sewer. 40,000 30,000 20,000 10,000 0 na na na Gallons of Spilled Sewage # of gallons per 100 miles of sewer NSD CA Average Analysis: The District has been very successful in keeping the amount of Category 1 sewage spilled per 100 miles of sewer at a level significantly below the California state average. In 2013, there were no Category 1 sewer overflows. 2. Product Quality Service Delivery Product Quality Service Delivery assesses quality service based on District-established objectives and service level targets. It focuses on non-regulatory performance targets. Plugged Main Lines: This is the number of sewer mains that were plugged and needed immediate attention, but did not result in a Category 1 Sanitary Sewer Overflow (SSO). 20 Plugged Main Lines # of plugged lines that did not result in a Category 1 SSO na na na Analysis: There has been a positive trend in this measure over the past few years, as the District has made increased investments and efforts toward preventive maintenance. Recycled Water Service Availability: This is the percentage of days from May 1 through October 31 that there is no interruption in recycled water delivery Page

176 100% Recycled Water Service Availability % of time RW delivery available to customers (May-Oct) 90% 80% na na na Analysis: This data is available starting in In 2007, the system was down for 10% of the days between May 1 and October 31. The availability increased to 99% the following year, with the next two years at 100% availability during these dates. In 2011, the system was down for 4 days to repair a leak in a recycled water main line. In 2012 and 2013, there were no breaks in recycled water service availability. Recycled Water Reuse by Customers: This is the percentage of recycled water created by the treatment plant during the months of May through October that were sold to customers, instead of being applied to spray fields. This is a measure of how much of the District s recycled water is being put to customer reuse. 100% 80% 60% 40% 20% 0% Recycled Water Customer Reuse % of RW sold to customers Goal - 60% Analysis: From 2005 through 2008, the District increased its sales of recycled water by expanding its customer base. The years 2009 to the present saw declines from 2008 levels because of decreased recycled water use at Chardonnay Golf Course when it converted 9 holes to vineyard use. The 2010 and 2011 years were impacted by cool summers and wet springs. The 2012 calendar year was considered a typical weather year, while 2013 was one of the driest years on record for Napa County Page

177 The District needs to maintain a steady rate of recycled water sales to ensure adequate storage in the ponds and avoid summer discharges to the Napa River. In 2013, the District was able to meet this requirement. There are several development projects that have requested recycled water from the District, but those projects have not yet come on line. When they do, there will be sufficient customer demand to increase the percentage of recycled water reused by customers, and to increase the overall quantity of recycled water delivered. The current goal of 60% of recycled water used by customers equates to what s needed in a typical weather year for the District to meet customer demands and meet the District s non-discharge requirements. Biosolids Put to Beneficial Reuse: Percentage of biosolids that are applied to land that is seeded and harvested for use by livestock or associated use, based on dry tons applied to acres. 100% 80% 60% 40% 20% 0% Biosolids Put To Beneficial Reuse % of biosolids applied to seeded & harvested acres na na na na na Analysis: The District s current program includes the agricultural application of biosolids for beneficial reuse on District owned or leased land. In late 2010, the District signed a contract with a farmer to grow agricultural crops that were later harvested and used as animal feed. Of the 200 acres of land where biosolids were applied, 180 were seeded and harvested in All lands applied with biosolids in 2012 (175 acres) and 2013 (179 acres) were seeded for beneficial reuse, either for agricultural commodities or as sheep grazing land Page

178 EUM Attribute #2: Customer Service 1. Customer Complaints Customer Complaints assesses the complaint rates experienced by the District. Currently, the District does not currently maintain records on customer complaints. Service Calls for District Plugged Laterals: The District uses the number of plugged laterals in the District s portion of the lateral as a proxy for determining customer complaints, as these problems lead to backups. The goal is to see a downward trend in this number Service Calls for District Plugged Laterals # of service calls Analysis: There has been a steady trend toward fewer service calls that were due to plugs in the District s portion of the lateral. During the past several years, the District has focused on preventive maintenance, partially in an effort to reduce these backups. These efforts have a long-term focus, but it appears that the number of District plugged laterals is decreasing as a result of these efforts. 2. Customer Service Delivery This is a measure of the District s own service level targets as they related to customer service. Service Call Response Time: The District maintains a goal of responding to service calls for sewer backups by arriving at the site of the backup within 30 minutes of the call. This measure shows the percentage of calls that were initially responded to within 30 minutes and the average response time Page

179 % response in 30 minutes 100% 80% 60% 40% 20% 0% Service Call Response Time % of calls responded to within 30 minutes (blue line) average # of minutes to respond to calls (green column) na na na na na na na Average Response Time Analysis: The District began collecting this data in 2010 and 2011 and could not be compiled for previous years from existing records. The measure received a watch rating because, although the average response time was 30 minutes and met the stated goal, the trend is starting to show a negative pattern. In 2013, the percentage of calls that were responded to within 30 minutes dropped from 74% to 67%, and the average response time increased from 27 to just over 30 minutes. Development Review Response Time: The District maintains a goal of completing review of development plans within 30 days of receipt of the plans. This chart shows the percentage of plans that were reviewed and returned within that goal. % Reviewed in 30 Days 100% 80% 60% 40% 20% 0% Development Review Response Time % of plans reviewed within 30 days (blue line) average # of days to review plans (green column) na na na Analysis: Over the past four years, the number of development reviews have only been a fraction of those received prior to the beginning of the recession, allowing the District to meet its goal of completing reviews within 30 days (over 96% in 2013), while maintaining the average number of days to review plans at about Average Days per Review Page

180 3. Customer Satisfaction This is an overarching customer satisfaction measure based on requested customer feedback (surveys), not calls received or internal customer satisfaction service level commitments. Customer Satisfaction: This is the measure of how well District staff performed, according to the customer who was directly impacted by that work. Surveys were sent out for all plug-up calls and for any time the District conducted a lateral repair or installed a cleanout that affected private property. 100% 80% 60% 40% 20% 0% Plug-Up Calls % of Calls Displayed by Rating % Poor % Fair % Good % Excellent % 80% 60% 40% 20% 0% Cleanouts or Lateral Repairs % with Rating % Poor % Fair % Good % Excellent Analysis: The District started conducting these surveys in 2011, with the first full calendar year of data in The first chart is for interactions when the customer calls the District for service to clear a plugged sewer line. The second is for the installation of sewer cleanouts or lateral replacements, where the District initiates interaction and involves construction practices. Both measures show positively on the District, with 100% of plug-up surveys and almost 98% of cleanout or lateral repair surveys reporting that the District s service was either Excellent or Good Page

181 EUM Attribute #3: Employee and Leadership Development 1. Employee Retention and Satisfaction This measure gauges the District s progress toward developing and maintaining a competent and stable workforce. Experience Turnover Rate: This is the percentage of years that retiring employees worked at the District compared to the total number of years of experience for all employees. It measures the amount of experience lost in any given year due to retirements at the District. 10% 8% 6% 4% 2% 0% Experience Turnover Rate % of experience lost each year from retirements na na na Analysis: Most employees who leave employment from the District do so through retirement. Most retirements are known in advance and planned for. The experience turnover rate for is in line with expectations. There were no retirements in The experience turnover rate from retirements at the District is not a controllable measure, and as such this is not a performance measure as much as it is a data set that helps to inform whether there are trends in the workforce to which management needs to respond. Anticipated retirements for the next 5 years are as follows: 4 Eligible Retirements # of employees age 55 or over with at least 20 years of service There is one employee expected to retire in 2014 who has not yet reached age 55. With the exception of this one employee, there is Page

182 nothing in the data to suggest that employees are retiring faster than would normally be expected. Employee Survey Response: The following charts show the response to three questions asked during an annual or biennial employee survey. These questions are designed to gauge employee satisfaction. The survey was conducted in 2010 and 2011, but not in 2012 or It is expected that the survey will be administered again in "I feel I am valued by my work unit." % of employees responding "agree" or "strongly agree" 100% 80% 60% 40% 20% 0% na na na na na na na na "I tell others that NSD is a great place in which to work." % of employees responding "agree" or "strongly agree" 100% 80% 60% 40% 20% 0% na na na na na na na na % 80% 60% 40% 20% 0% "I will look for work outside NSD in the next year." % of employees responding "disagree" or "strongly disagree" na na na na na na na na Page 182

183 Analysis: Fall 2010 was the first time the District surveyed its employees on these three attributes. In Fall 2011, the survey was repeated. In all three questions, the results for the District improved. For the first two questions, the results are highly favorable, while the third question, regarding looking for work in the next year, this is still lower than desired by District management and was rated watch. The survey will be repeated in 2014 to evaluate changes over time. 2. Management of Core Competencies This measure assesses the District s investment in and progress toward strengthening and maintaining employee core competencies. Total Training Hours: This is the total number of training hours provided to employees at the District. No Measure. Analysis: It is the employee s responsibility to track hours necessary to maintain specific certifications. The District currently does not track total training hours by employee. A future goal of the District is to implement a system to track employee training. Online Safety Training Completion: This is the percentage of total online safety training class hours completed by staff, and the percentage that were completed prior to their due date. 100% 90% 80% 70% 60% Online Safety Training Class Hours % of assignments completed % of on-time assignments na na na na na na na Analysis: The online safety program began in August 2006, but performance data was not available until This measure shows the completion rates and on-time completion rates for online safety classes. This past year, considerable improvement was made in the completion rate and on-time completion rates of these trainings, with over 99% of trainings completed on-time Page

184 3. Workforce Succession Preparedness This measure assesses the District s long-term workforce succession planning efforts to ensure critical skills and knowledge are retained and enhanced over time, particularly in light of anticipated retirement in future years. Focus is on preparing for workforce succession, including continued training and leadership development. Succession Planning: Percentage of key positions covered by long-term workforce succession plan. Seven (7) positions were identified as critical for the development of succession plans. The District has developed formal succession plans for each position and has completed the necessary cross training associated with these plans. Analysis: The District completed succession plans for the following positions: Plant Manager, Reclamation Director, Collection System Manager, Laboratory Supervisor, Human Resources Officer/Clerk of the Board, Senior Accountant and Safety, Training and Fleet Maintenance Officer. In addition to development of succession plans for the 7 most critical positions at the District, the District maintains other practices designed to capture institutional knowledge and maintain continuity during periods of staffing transition. The District has implemented the Operator III Training Program to increase operator knowledge and allow for the necessary skills to operate the plant s treatment processes and regulatory control on a day-to-day basis. The Plant Maintenance and Laboratory Supervisors have also trained staff sufficiently to provide coverage in the event of vacancy. The Collection Department has a crosstraining process to ensure that all employees know how to do every job and use all of the equipment in the department Page

185 EUM Attribute #4: Operational Optimization 1. Resource Optimization This measure examines resource use efficiency, including labor and supplies & services costs per unit of output. Electricity Consumption by Source: Electricity is one of the largest expenses in the treatment process. The treatment plant uses a cogeneration engine ( Cogen ) powered by captured and compressed methane gas to create electricity. The goal is to generate as much electricity as possible from the Cogen system, to offset purchased electricity. This chart shows the total megawatt hours of electricity purchased, electricity produced by cogeneration, and the percentage of total electricity that came from cogeneration. Megawatt Hours (MW-h) 10,000 8,000 6,000 4,000 2,000 0 Electricity Consumed by Source in MW-h, and Cogeneration as a % of total electricity used MW-h Purchased MW-h Cogen Cogen % of Total 50% % 30% 20% 10% 0% Cogen % Analysis: In May 2007, the Bay Area Air Quality Control Board (BAAQCB) shut down the Cogen for failure to meet emission standards. The system was not brought back online until Also, from January 2008 to July 2008, the District could not operate the Cogen engine because the Dystor membrane cover failed, eliminating the ability to store methane gas for the Cogen. These events combined to result in a significant decrease in percentage of power generated by the Cogen. PG&E electricity usage data in 2009 and 2010 is understated due to an error in the District s electricity meters. The usage data starting in 2011 is accurate. The percentage of electricity produced by the Cogen increased significantly in 2013, due to increased amounts of FOG accepted at the FOG Receiving Station. Electricity Consumption Efficiency: This chart shows overall electricity efficiency by measuring the amount of electricity consumed per million gallons of wastewater effluent. Winter months (November-April) represent wastewater processed and discharged to the river. Summer (May-October) represents Page

186 wastewater processed to recycled water standards and either sold to customers or applied to spray fields. Megawatt Hours Electricity Consumed per Million Gallons Treated # of Megawatt hours per MG Winter Summer Analysis: As overall electricity consumption has decreased at the plant, the amount of electricity per million gallons has also decreased, although we have seen an uptick in 2013 with decreased flows from the drought (and resulting higher concentrations of loadings). The winter figures have a more direct relationship between electricity usage and gallons treated than the summer figures, as the amount of recycled water delivered is an outlying factor that impacts the ratio. Chemical Consumption: Chemicals are a significant cost in the wastewater treatment process. Two chemicals specifically make up a majority of the chemical budget sodium hypochlorite (HCS) and polymer (Poly). HCS is used to disinfect water and remove bacteria, while polymer is used to remove suspended solids and to dewater biosolids. Usage can fluctuate based on environmental conditions, the amount of wastewater processed and the type of processing (river discharge or recycled water production), so these have been represented using gallons of chemicals per million gallons processed for both the summer and winter seasons. Gallons Used Chemicals Used per Million Gallons Treated # of gallons per MG HCS- Winter HCS- Summer Poly- Winter Poly- Summer Analysis: Generally, chemical consumption per million gallons treated has reduced for most chemicals, although there has been a 28 Page 186

187 recent uptick in the amount of sodium hypochlorite used due primarily to decreased flows from the drought and associated increases in loading concentrations. The large swings in chemical use have stabilized with the implementation of the ORP system and the plant reset that was part of the master planning process Page

188 EUM Attribute #5: Financial Viability 1. Budget Management Effectiveness This measure includes commonly used financial performance indicators to show the short term health and long term financial trends of the District. Revenue-to-Expenditure Ratio: This ratio is total revenue from all sources divided by total expenditures, including debt service and capital, but excluding depreciation, minus 1. This ratio shows the annual impact to fund equity. Ratio below 0 means that there were more expenses than revenues in that year, while a number above 0 means there was more revenue than expenditures. The ratio can fluctuate above and below 0, depending on the financial plan for the year, but a long-term trend of expenditures greater than revenues (a ratio of less than 0) is problematic and indicative that reserves are being used to finance the ongoing expenses of the District and that a course correction is likely. 1.0 Revenue-to-Expenditure Ratio revenues divided by expenditures FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 Analysis: If not for the sale of land in FY05, generating $2.8 million in revenue, FY05 would have had a ratio of The three years of 15% sewer service charge increases from FY07 to FY09 are responsible for the stabilizing trend seen in the past five years. The last three years show a solid trend toward maintaining a sustainable ratio, with FY13 showing a significant increase due primarily to the inflow of proceeds from debt, with corresponding debt service timing causing a temporary imbalance toward the positive. Capital Expenses Compared to Operating Expenses: Capital expenses as a percentage of operating expenses (less depreciation) is a measure that has meaning only when compared against itself over time, or compared to other similar agencies. An upward trend is indicative of an expansion period or a period focused on renewal and replacement of capital assets, while a downward trend is indicative of decreased growth or less investment in system renewal and replacement Page

189 150% Capital Expenses as a Percentage of Operating Expenses 100% 50% 0% FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 Analysis: More study is necessary to determine what an appropriate baseline or target number should be, although the District currently maintains a Capital Improvement Plan that shows just over $100 million to be spent over 10 years. This would indicate a typical year having a capital expense to operating expense percentage of approximately 55%. Much of the 10 year CIP is front loaded in the first three years, so this percentage should exceed 55% through FY15, then decrease in future years. Debt Service Coverage Ratio: The District is required by its debt covenants and financial policies to maintain a debt service coverage ratio of at least 1.25, or 125%. The calculation is made by adding all revenue sources and subtracting all operating expenses (excluding depreciation) to get net revenue. The net revenue (green bars) must be more than 125% (red line) of the sum of all debt service payments. 400% Debt Service Coverage Ratio net revenues divided by debt service (125% minimum) 300% 200% 100% 0% FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 Analysis: The District has consistently maintained a debt service coverage ratio higher than the 125% minimum requirement. This number is evaluated during each budget development and adoption process to ensure that this covenant is maintained. With the issuance of new debt in FY13, the ratio decreased, but stayed higher than the projected ratio of 200% Page

190 2. Financial Procedure Integrity These are questions that gauge the presence of best practices and internal processes to ensure a high level of financial management integrity. Does the District have financial accounting policies and procedures? (Y/N) Yes. Comprehensive policies were adopted in February 2007, and revised and updated in May 2010 and May Are the financial results and internal controls of the District audited annually? (Y/N) Yes. The District is required to conduct an annual audit both by its bond covenants and by its accounting policies. Have the number of control deficiencies and material weaknesses been reduced from previous audits? (Y/N) Yes. The number of control deficiencies noted by the financial auditors in their management letters have decreased from two in FY08 to one in FY09 and none in the last four fiscal years. 3. Bond Rating Bond ratings are a general indicator of financial viability; however the rating is not entirely in the District s control as ratings also take into consideration the condition of the local economy and the condition of the capital markets. A higher bond rating is desirable and can be viewed as one of several factors of financial health. What is the District s bond rating, and has it changed recently? AA- (S&P, 2009 and 2012) Analysis: When the District refinanced most of its long term debt in 2009, Standard & Poor s upgraded the District from A+ to AA- for its fixed and variable rate revenue bonds. In December 2012, S&P confirmed the rating of AA-/Stable Outlook for the issuance of new long term debt. AA- rating means that the District s debt is considered High Grade/High Quality in the bond market Page

191 4. Rate Adequacy These measures helps the District consider its sewer service rates relative to factors such as external economic trends, short-term financial management, and long-term financial health. Sewer Service Charges Compared to Inflation: The annual increase in sewer service charges (SSC) compared with the Consumer Price Index for all Urban Consumers (CPI-U) in the San Francisco/Oakland/San Jose area. 15% 10% 5% Sewer Service Charge Compared to Inflation % of change from prior year SSC Change CPI Change 0% FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 Analysis: There were no SSC increases from FY02 through FY06. In FY07, the District began the first of three 15% increases to bring the rate up to meet operational demands and to get the rate back in line with inflationary impacts. For the last four fiscal years, the rate increased with CPI. Forecasted Rate Compared to Calculated Full Life-Cycle Cost of Service Rate: The calculated sewer service charge rate, based on renewal and replacement of 3% of depreciable assets, is forecast out five years by the District as part of the budget development and long-term forecast process. This life-cycle cost of service rate is compared against the sewer service charge forecasted rate based on inflation assumptions. The District s rate based on annual inflationary increases should match the rate calculated using full life-cycle cost of service Page

192 Cost of Service-based Rates actual or forecasted rate as % of cost of service rate 125% 100% 75% 50% FY14 FY15 FY16 FY17 FY18 Analysis: Sewer Service Charge rates are set based on changes to the CPI. However, as part of the budget development process, the District also calculates what the rate should be based on life-cycle cost of service. This analysis is projected over the next five fiscal years. The calculations show that the calculated rate based on life cycle cost of service and the projected rate based on projected CPI increase are similar, although the estimated life-cycle cost of service rate is higher. The ratio appears to be stable and set to improve slightly over the next five years, earning it a satisfactory rating. Does the District maintain a rate stabilization reserve to sustain operations during cycles of revenue fluctuation, in addition to operating reserves? (Y/N) Reserves for rate stabilization and revenue fluctuation are not necessary at this time. The District maintains adequate reserves, and rate stabilization is not an issue given the methodology for revenue collection. Analysis: Sewer service charges constitute over 85% of District revenues, with the significant majority of that revenue coming from residential customers. SSCs are collected as an assessment on the property tax statements, and the District has committed in Ordinance to allow for increases to the SSC rate by CPI. These structural factors combine to provide adequate revenue stability for the District. The operating and cash flow reserves, as established in the District s financial policies, are fully funded and sufficient to cover timing fluctuations in revenue collection without impacting operational readiness Page

193 EUM Attribute #6: Infrastructure Stability 1. Asset Inventory and Condition Assessment This measure gauges the District s efforts to assess assets and asset conditions, as a first step toward building a comprehensive asset management program. Asset Inventory: This is the percent of the District s critical assets that have been inventoried within the past 5-10 years. Inventory is maintained with 2 asset management systems one for Collections (Hansen) and one for the plant (MP2). Both systems track assets and condition assessments. Analysis: The District has not conducted a physical inventory of its assets in the past 5 years, although there are several systems at the District that keep inventory of most of the District s assets. The Hansen database is updated regularly as repair work and condition assessment CATV work is completed. The MP2 database is populated with major assets, but still needs to be completed. All capital assets are also tracked in the Fixed Asset database used for financial reporting. Sewer Main Condition Assessment: This graph shows the percent of sewer main lines that are video inspected each year and assessed for condition and maintenance problems. 15% Main Line Condition Assessment % of sewer main lines video inspected each year % inspected Goal 10% 5% 0% Analysis: The District has steadily increased the amount of video condition assessment done on the sewer mains, but saw a decrease in This decrease was due to two employees being on extended leave during this period, and a slightly greater emphasis placed on doing repairs as the unusually dry fall and winter weather provided this opportunity. It is anticipated that the drop in 2013 is not a trend that will continue into Page 193

194 2. Asset Renewal / Replacement This measure assesses asset renewal/replacement rates over time. The measure should include targets, based on the District s determination of acceptable risk for different asset classes. Renewal & Replacement Expenses: This graph shows the amount actually spent toward the renewal or replacement of capital assets divided by the total net worth of assets, shown as a percent. 5% 4% 3% 2% 1% 0% Renewal & Replacement of Assets amount spent each year as a % of net worth of assets 4% Goal 2% Min FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 Analysis: The District should be replacing between 2% and 4% of the value of its assets, on average, through renewal and replacement of those assets. The District has done well in seven of the past 10 years. The ratio is anticipated to stay within the target range in FY14 and beyond. Sewer Main Renewal & Replacement: This graph shows the percent of sewer mains maintained by the District that have been replaced annually. 2.0% 1.5% 1.0% 0.5% 0.0% na na na na Sewer Main Renewal & Replacement % of mains replaced or rehabilitated Analysis: The District started keeping track of this metric in The District records the mains as being replaced or rehabilitated only at the end of a capital project. In 2013, there was significant activity toward renewal & rehabilitation of sewer mains, but this work will not be completed until The District needs to develop a longer track record and an internal goal to determine whether it is meeting acceptable performance expectations Page

195 Lower Sewer Lateral Renewal & Replacement: This graph shows the number of lower sewer laterals maintained by the District that have been replaced annually by the Collection Department, understanding that lower laterals are also replaced when sewer mains are replaced. The aspirational goal is for the Collection Department to rehabilitate or replace at least 60 lower laterals annually Lower Lateral Renewal & Replacement # of laterals replaced or rehabilitated na na na na na na Goal Analysis: The District started keeping track of this metric in 2010 when it purchased the ability to line lower laterals itself, rather than contracting out. The District has established an aspirational goal of rehabilitating or replacing 60 lower laterals annually. The District has been making steady progress toward meeting the goal, and is expected to reach it in the next calendar year. Because of the continuous year-over-year progress that has been made, the measure s rating was increased from unsatisfactory to watch. 3. Collection System Integrity This measure examines the frequency of collection system failures. When tracked over time, the District can evaluate whether the rate is increasing, stable or decreasing. Collection System Failure Rate: A collection system failure is when a portion of sewer pipe collapses and flows become obstructed or uncontained from that collapse, rather than being caused by sediment, grease, roots or some other foreign object. There have been 4 failures over the past 20 years, two in the 1990s and one in 2006, and one in Analysis: There are so few of these types of failures that a graph would not be meaningful. The District s record of failure rates is outstanding Page

196 4. Planned Maintenance Planned maintenance (PM) includes both preventive and predictive maintenance, and is performed according to a predetermined schedule rather than in response to failure. Predictive maintenance is initiated when signals indicate that maintenance is due. All other maintenance is categorized as corrective or reactive. Plant Planned Maintenance Ratio: There are two numbers here. The first is the percentage of the number of work orders (WOs) assigned to planned maintenance at the treatment plant divided by the total number of WOs for any maintenance activity (planned and corrective). The second is the same ratio, but uses the total number of hours worked instead of the number of work orders. 100% 80% 60% 40% 20% 0% Plant Planned Maintenance Ratio PM divided by total maintenance for WOs and Hours WOs Hours Analysis: The plant has been able to maintain a relatively consistent ratio of work orders, at about 80% on preventive maintenance activities, and 20% on corrective maintenance activities. The ratio for hours is lower, as corrective maintenance items tend to take more time to complete than performing preventive maintenance. Sewer Main Line Cleaning: This chart shows the percentage of sewer main lines cleaned during the year, compared to the District s goal of 40% cleaned annually. 60% 50% 40% 30% 20% 10% 0% Sewer Main Line Cleaning % of line cleaned each year % cleaned Goal-40% Page 196

197 Analysis: Over the past decade, the District has increased its efforts in preventive maintenance and cleaning of sewer mains, with the goal of cleaning the equivalent of 40% of its sewer mains every year. The District has met this goal for the last six years. Collections Planned Maintenance Ratio by Hours: This is the total number of staff hours spent on planned maintenance in the collection system divided by the total number of hours spent doing any maintenance activity (planned and corrective). Numbers closer to 100% means that the focus is on planned maintenance activities, rather than responding to emergency repairs. 100% 80% 60% 40% 20% 0% na Collections Planned Maintenance Ratio PM divided by total maintenance for WOs and Hours na WOs Hours Analysis: The collection system has consistently maintained a very high ratio of planned maintenance to total maintenance, both for the number of work orders and for the number of hours worked. Pollution Prevention Inspections: Pollution prevention inspections ensure that restaurants and other Food Service Establishments (FSEs) are properly maintaining their grease interceptors and following Best Management Practices. Properly maintaining this equipment results in fewer corrective maintenance problems in the collections system. The goal is to inspect every FSE with a grease trap or interceptor at least once per year. 100% 75% 50% 25% 0% Number of Pollution Prevention Inspections % of FSEs inspected Goal Page 197

198 Analysis: This program began in In 2011, the Board adopted new Best Management Practices (BMPs) for fats, oil and grease management by food service establishments (FSEs). In 2012, the District increased its inspections for compliance with the District s Sewer Use Ordinance and with the BMPs. With concerted effort applied in this area, every restaurant with a grease trap or interceptor was inspected in This increase over prior years justifies the increased rating from unsatisfactory to satisfactory Page

199 EUM Attribute #7: Operational Resiliency 1. Recordable Incidents of Injury or Illness Incidence rates can be used to show the relative level of injuries and illnesses and help determine problem areas and progress in preventing work-related injuries and illnesses. Total Recordable Incidence Rate: This is the number of workrelated injuries and illnesses times 200,000 divided by the number of employee hours worked. This is a standard formula used by OSHA to normalize data. The 200,000 represents 100 employees working 40 hours per week, 50 weeks per year, and provides for the comparability of incidence rates Total Recordable Incidence Rate NSD Industry Analysis: The District is compared here to the Utility: Sewage Treatment Facility industry category as reported by the U.S. Bureau of Labor Statistics. The District s incidence rate is comparable to the national average. There was a marked increase in the number of recordable incidents in 2013, but this one year is not enough to change the rating for this measure given the overall performance of the District over time. Lost Time Hours: This is the number of hours that a worker could not work due to a work-related injury or illness. Lost time begins to accrue once an employee misses one full day of work. 1,000 Lost Time Hours Analysis: The District did not have a lost time accident from 2005 through The District continues to have exceptionally low lost time due to workplace injury or illness. In 2011, there were Page

200 lost time injury. In 2012, there was 1 lost time injury. The 2012 injury resulted in significant lost time in While the increase in 2013 appears to be significant, the fact that it is related to one incident in 2012 has a mitigating impact on the rating. 2. Insurance Claims These measures examine the number, type and severity of insurance claims to understand insurance coverage strength or vulnerability. Number of Insurance Claims: This is the number of general liability and automobile liability claims per 200,000 hours worked. 15 Insurance Claims # of claims per 200,000 hours of work FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 Analysis: After a period of relatively constant rate of insurance claims per year, the District has seen a significant increase in the past three years, from one claim in 2010 to seven claims in Management responded with a safety stand down in October 2013, to call attention to the increased safety incidents and refocus District employees on safe working practices. While the number of claims has increased, the severity of claims during these years (see below) was not significant. Severity of Insurance Claims: This is the total amount paid out for general liability and automobile liability claims per 200,000 hours worked. $150,000 Severity of Insurance Claims cost of claims per 200,000 hours of work $100,000 $50,000 $0 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 42 Page 200

201 Analysis: With the exception of two years in the past 10 years, the District has had a relatively low average cost per claim. This represents a good trend for the District. Experience Modification (XMOD) Rate: This is the rate used by the workers compensation insurance company to determine the District s workers compensation experience. One hundred is considered the industry average. Numbers over 100 mean that the District has more claims than the industry average, while numbers below 100 are better than the average. CSRMA is the insurance pool the District is in for Workers Compensation claims and includes only sanitation districts in the state of California Experience Modification (XMOD) Rate (lower # is better) District Industry Avg CSRMA Avg FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 Analysis: Through the implementation of several safety programs at the District, the District s XMOD rate has significantly dropped over the years. The District has now consistently performed better than the industry average and the CSRMA average for several years. 3. Risk Assessment and Response Preparedness This measure asks whether the District has assessed its all-hazards (natural and human-caused) vulnerabilities and risks and made corresponding plans for critical needs. Are Emergency Response Plans in place for the following? (Y/N) o Treatment Plant: Yes o Lift Stations: Yes o Collections: Yes Analysis: Emergency Response Plans for the plant and lift stations are in place, and are trained and practiced regularly. The Collection System staff has plans and equipment for system bypasses Page

202 Frequency of Emergency Response Plan (ERP) Trainings: This is the number of emergency response trainings conducted by the treatment plant per year ERP Trainings # of trainings at the treatment plant per year Analysis: The Plant trains on and practices its Emergency Response Plan quarterly. The plant has also started the practice of training Collection System, Administration and Engineering staff once per year on the plant s ERP. In 2013, the summer quarter training was not conducted because of the move of the Administration, Engineering and Collection System staff to their new locations adjacent to the plant. In lieu of quarterly training, the time was spent integrating these departments into the Emergency Response Plan at the plant. 4. Ongoing Operational Resiliency This measure assessed the District s operational reliability during ongoing or routine operations. Uptime for Cogeneration Engine: The cogeneration engine ( Cogen ) is critical equipment to reduce purchased electricity demand. The use of this equipment also reduced the need to operate the boiler. Increased boiler operation would require extensive and costly upgrades to the boiler to meet air quality standards. 100% Cogeneration Engine Uptime % of time engine is available 75% 50% 25% 0% Page 202

203 Analysis: In April 2012, the Cogen was offline for 28 days while it was rebuilt as part of scheduled maintenance. Since 2009, the District has maintained the Cogen at an optimal level to provide for significant uptime. With increased FOG (fats, oils and grease) deliveries at the FOG receiving station in 2013, more biogas was produced allowing for even greater operating efficiencies for the Cogen unit. The Dystor membrane over the day storage tank was damaged in late 2014, but staff was able to continue to capture biogas for use in producing energy. Uptime for Pumps at Influent Pump Station: There are three pumps at the Influent Pump Station (IPS), the pump station that lifts the sewage up from the collection system and into the plant Headworks. All three pumps at IPS are necessary during significant storm events to handle the high flow volumes. Uptime is defined as the percentage of days that all three pumps are operational and in service. 100% 90% 80% 70% 60% IPS Pumps - Uptime % of time 3 pumps are available (excludes planned maintenance) Analysis: VFD replacement parts have been particularly difficult to acquire for these pumps, as they must be ordered directly from Italy. In previous years, staff stockpiled some of the more difficult parts to acquire, resulting in several failures being fixed within a week of the breakdown. In 2011, the #1 pump was down for 122 days due to 2 different events that caused catastrophic failures, and there were significant delays in sourcing parts for the repairs. In 2012, Pump #1 was down for 10 days and Pump #3 was down for 59 days. In 2013, Pump #2 was down for 76 days. Construction on the IPS replacement starting in late 2013 and is expected to be completed by the end of summer Operational Resiliency Under Emergency Conditions This measure assesses the operational preparedness and expected responsiveness in critical areas under emergency conditions Page

204 Power Resiliency: This is the number of hours that backup power is available at the treatment plant (including the Influent Pump Station) and at the other three pump stations in the collections system. Treatment Plant West Napa PS Riverpark PS Stonecrest PS 23.5 hours 20.5 hours 40.0 hours 47.5 hours Analysis: These times indicate how long the facilities could operate during peak pumping without electricity from the grid and without additional deliveries of diesel fuel for the generators. During power outages longer than 20 hours, staff would be required to refuel the generator at West Napa Pump Station. Critical Parts and Equipment Resiliency: This is a measure or evaluation of lead times for the repair or replacement of operationally critical parts or equipment. o Influent Pump Station (IPS) The pumps at IPS are the most critical equipment at the plant. Other components of the process could be down and there is sufficient redundancy in processes or alternatives available to manage until repairs are made. But during severe storm events, all three pumps at IPS are needed to manage the influent, either into the plant or into the ponds. To consider IPS resilient, the station should have sufficient firm capacity, meaning that the station could handle all of the influent during high flow events, even if the largest of the three pumps were to be offline. IPS does not have firm capacity to meet the normal high flow events, so this measure has been rated as unsatisfactory. Also, as noted in the prior measurement Ongoing Operational Resiliency, the inability to get replacement parts for repairs in a timely fashion causes longer than acceptable down time periods. To mitigate the firm capacity problem, the District maintains two companies on 24-hour call notice to assist with pump repairs, if needed. Additionally, the District has in stock some of the critical electrical components of the pumps. To assist resiliency further, the District upgraded the soft starts for the variable frequency drives (VFDs), so that even in the event of VFD failure, the soft starts will run the pumps Page

205 To correct this problem for the long term, the District is currently constructing a replacement for the IPS to address both the firm capacity and the pump resiliency issues. Construction of the new OPS is expected to be completed in o Backup Power Plant backup generators are tested two (2) hours every month, with preventive maintenance performed annually. In response to some problems in the high voltage distribution system a few years back, the District performs annual preventive maintenance on the high voltage distribution system and has implement some upgrades/redundancies to avoid future failures. Critical Staff Resiliency: This is a measure of the ability for backup staff to cover critical operations and maintenance positions. o Collections: All collection system workers are cross trained on tasks and equipment. Regular tasks are rotated to ensure continued familiarity with all tasks during emergency events. Of the ten field workers, eight are on the standby rotation. o Plant Operations, Maintenance and Laboratory: All critical staff positions have backup staff trained to complete all required tasks of that position, and supervisors are trained to complete all tasks within their work unit. The Plant Manager position has limited coverage by the Operations Supervisor. Analysis: There is significant cross training for critical operations and maintenance positions to ensure adequate coverage with the appropriate skills, experiences and certifications. Treatment Operations Resiliency: This measure is the minimum daily demand that can be met with the treatment plant offline. Minimum daily demand is defined as the average daily demand for the lowest production month of the year. 88 days of capacity Analysis: The ponds provide sufficient storage should the plant be unable to produce water with the capacity of storage being dependent on the time of year. At the beginning of the summer season, the ponds are at the lowest level and at an influent flow at Page

206 7.4 MGD, there is 88 days of capacity, assuming there is no demand for recycled water from customers or reclamation that could extend that time horizon. At the end of summer, and at other times during the year, the pond capacity is less Page

207 EUM Attribute #8: Community Sustainability 1. Watershed-based Infrastructure Planning This measure addresses the District s efforts to consider watershedbased approaches when making management decisions affecting infrastructure planning and investment options. Does the utility employ alternative, watershed-based approaches to align infrastructure decisions with overall watershed goals and potentially reduce infrastructure costs? (Y/N) Yes. Analysis: The District is investing in recycled water infrastructure greater than is necessary to meet the current needs of its ratepayers to avoid summer river discharge. This infrastructure has been directed toward locations within the watershed that are at risk of significant groundwater depletion. 2. Green Infrastructure Green infrastructure includes both the built and natural/non-built environment. This measure assesses the extent to which the District promotes or engages in practices that protect natural resources and the environment. Has the District explored green infrastructure approaches and opportunities that are aligned with the District s mandate, goals and objectives and community interests? (Y/N) Yes Analysis: The District has implemented the following programs or practices: o Recycled Water Delivery sold to customers to offset the use of groundwater or city-provided potable water for irrigation. o Toilet Rebate Program to promote reduced potable water consumption. o Clothes Washer Rebate Program to encourage consumers to purchase appliances that use less potable water. o Regional Trails Support work cooperatively with regional trail designers and advocates to connect a nonmotorized multi-modal trail segment adjacent to the treatment plant Page

208 o Pharmaceutical Disposal Program works with local clinics to encourage proper disposal of medications. o Fats, Oils and Grease (FOG) Receiving Station accept grease from food service establishment grease interceptors, reducing the need to truck this waste to Oakland, and converting the waste into biogas that can be used to generate electricity. Does the District have procedures that incorporate green infrastructure approaches and performance into new infrastructure investments? (Y/N) Yes Analysis: The District has implemented the following programs or practices: o Green Building the new Administration/Engineering building and corporation years will incorporate green features and will comply with the new green building code. o Alternative Energy Production the District has studied ways to use the plant s resources (waste products, land) for the generation of alternative energy sources (methane, solar, wind, etc.). In 2012, the District completed its Fats, Oil and Grease (FOG) Receiving Station that will result in the District generating on its own up to half of its electricity needs. Additional projects are being evaluated, and the District will implement those recommendations that have sufficient return on investment or cost savings. o Lateral Lining System the District started using a trenchless system for lining laterals, which is used in lieu of digging trenches for the repair and replacement of laterals. This process reduces waste through reusing existing pipe rather than disposal, and reduces the use of asphalt, cement and rock to backfill the trench. There is also less diesel emissions from reduced backhoe and dump truck use. o Pipe Bursting and Cured-in-Place Pipe (CIPP) Lining the District has developed a preference for pipe bursting or CIPP lining to replace or rehabilitate sewer mains, wherever feasible. These processes eliminate most of the trenching required, thus reducing landfill waste, reducing the use of rock, cement and asphalt to backfill, and reducing diesel emissions from associated equipment Page

209 3. Greenhouse Gas Emissions This measure is designed to evaluate how the District s operations impact greenhouse gas (GHG) emissions, and whether those emissions are increasing or decreasing over time. Carbon Dioxide Emissions: This is a measure of the metric tons of emissions of carbon dioxide (CO 2 ), by source. 2,000 1,500 1, na na na Carbon Dioxide Emissions in metric tons na Natural Gas Digester Gas Analysis: The natural gas is a purchased fuel, while the digester gas is a byproduct of the wastewater treatment process. The District strives to use as little natural gas as possible for the treatment process, preferring to put the digester gas to beneficial reuse. The plant only uses natural gas in the treatment process when the cogeneration engine is down for maintenance. The District does not currently collect data on nitrous oxide (N 2 O) and methane (CH 4 ) emissions, the other two main constituents of GHG. Digester Gas Beneficial Reuse: Biogas (predominantly methane) is a natural byproduct of anaerobic digestion and can be used as a fuel source. This is a measure of the percentage of digester gas that is used as fuel in the cogeneration engine to create electricity and heat, as opposed to flaring the biogas Page

210 100% 80% 60% 40% 20% 0% na Digester Gas - Beneficial Reuse % of digester gas run through cogeneration engine na na na Analysis: One goal of the District is to decrease the amount of digester gas flared (no beneficial reuse) and to increase the use of digester gas for electricity consumption through its cogeneration engine (beneficial reuse). Increased use of digester gas and decreased use of natural gas and purchased electricity will result in a net decrease in CO 2 emissions. The data shows a positive trend in putting the digester gas to beneficial reuse, with over 98% of digester gas being used in the cogeneration engine in Service Affordability Wastewater service affordability looks at community members ability to pay for sewer services. The District must balance keeping sewer service affordable while ensuring the rates needed for long-term infrastructure and financial integrity. Sewer Service Charge Bill Affordability: Affordability is subjective. However, tracked over time, the District can evaluate whether the sewer service charges (SSCs) are becoming more or less affordable as compared to median household incomes for the Napa County, using U.S. Census Bureau data. The U.S. EPA drafted affordability criteria in 1995, with the interim guidance suggesting that rates were affordable when the ratio of SSC to MHI was below 1.0% Page

211 1.25% 1.00% 0.75% 0.50% 0.25% 0.00% na na Affordability of Sewer Service Charges (SSCs) SSCs as a % of median household income (lower is better) FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 % of MHI US EPA Ratio Analysis: The SSC as a percentage of Median Household Income (MHI) went up from FY07 to FY09, as expected, given the 15% annual fee increases during this time. The SSC as a ratio of MHI has stabilized the past four years. Low Income Billing Assistance: This measures the number of households that are enrolled in the District s Low Income Assistance Program for annual sewer service charges. The number of individual properties in the program is graphed (green bars), as well as the number of Sewer Service Units (SSU) that those properties represent (blue line). These numbers are different, as there may be several low income housing units situated on a single property or tax lot. For example, a multi-family apartment complex that has 10 affordable housing units in it would count as 1 property and 10 SSUs in the chart below. # of properties Low Income Assistance Program # of properties (green bar) and # of SSU (blue line) na na na FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY # of SSU Analysis: This program began in FY07; at the same time the District began a process to increase sewer service charges by 15% per year for three years. In FY13, the program provided a reduction of $ (26.1%) per household from the annual charges ($435.44). As anticipated with the current economic climate, the number of properties partaking in this program increased in FY Page

212 EUM Attribute #9: Water Resource Adequacy 1. Water Supply Adequacy This measure is designed in the Effective Utility Management framework for potable water suppliers, and assesses short-term and long-term water supply adequacy, and related long-term supply considerations. The District has chosen to modify this attribute to refer to recycled water supply adequacy, to measure the short-term availability and long-term demands on recycled water and the ability of the District to meet those demands. Short-term Recycled Water Supply Adequacy: This chart compares three things: 1) the amount of recycled water that the District could reliably provide during the summer months for irrigation purposes, 2) how much it did produce for recycled water customers and 3) how much it produced for spray field disposal. Recycled Water Supply Adequacy acre-feet of recycled water 2,500 2,000 1,500 1, Customers Spray Fields Reliably Available Analysis: Demand by recycled water customers is approximately between 850 and 1,400 acre-feet per year, depending on weather and irrigation needs. With the District able to produce reliably approximately 2,000 acre-feet of recycled water per year during the irrigation season, there is sufficient recycled water supply for its current customers. 54 Page 212

213 Long-term Recycled Water Supply Adequacy: This table shows the current and potential future demands on recycled water, in acre-feet, for a typical weather year. Current Recycled Water Supply: 2,000 Acre-feet Estimated Per Board Demand Policy Existing Uses Existing RW Customers 1,200 1,400 District Use Kennedy Park & Napa Valley College 85 (incl. above) Existing Commitments Montelcino Golf Course Valley Gate Vineyards Kirkland Ranch 15 (incl. above) Napa State Hospital Stanly Ranch/St. Regis Infill-Industrial Areas MST Area Los Carneros WD Subtotal Existing Uses & Commitments 3,235 3,700 acre-feet Recycled Water Surplus / (Deficit) (1,235) (1,700) acre-feet Current and Planned Recycled Water Supply: 3,700 Acre-feet Existing uses and Commitments 3,235 3,700 Other Possible Uses Los Carneros Water District 1,150 1,150 MST Area Suscol Mountain Vineyard Subtotal Other Possible Areas 1,500 1,300 acre-feet Total Potential Uses 4,735 5,000 acre-feet Current and Planned RW Surplus / (Deficit) (1,035) (1,300) acre-feet Analysis: If all of the existing commitments were to complete development or transition to recycled water, the District would be in danger of not meeting its current recycled water commitments. To meet the projected long-term recycled water demand, the District is currently constructing an expansion to its recycled water production system. The expanded system will produce enough water for the existing uses and commitments per Board policy, but will be inadequate to meet all of the possible future user needs. Additional storage sites for recycled water would most likely be needed to provide for the projected long-term demand Page

214 EUM Attribute #10: Stakeholder Understanding & Support 1. Stakeholder Consultation This measure addresses the District s actions to reach out to and consult with stakeholders about District matters, including the District s goals, objectives and management decisions. Does the District identify stakeholders, conduct outreach, and actively consult with stakeholders about matters? (Y/N) Yes. Analysis: The District has consulted stakeholders and the general public on the following projects: o Winery Industrial User Permits (2013) public meetings and presentations to the Vintners Association and Chamber of Commerce on efforts to bring unpermitted wineries into the Industrial User program. o MST Recycled Water Pipeline (2012 and 2013) partnered with the County in their outreach efforts associated with the new recycled water pipeline in the MST area. o Recycled Water Rate Policy (2011) held public meetings and small meetings with interested stakeholders regarding the methodology and rate structure for recycled water rates. o Recycled Water Policy (2010) requesting written feedback from stakeholders, inviting stakeholders to present views to Board, presentation to Chamber of Commerce, soliciting feedback from general public via press release and website comment form. o Capacity Charges Increase (2009, 2010) meetings with city staff, residential and commercial developers, and building industry association; invitations to present views to Board, presentation to Chamber of Commerce. o Upper Lateral Pilot Project (2010) sent letters to affected home owners, held open house in community, made direct contact with home owners, posted information on website Page

215 2. Stakeholder Satisfaction This measure addresses stakeholder perceptions of the District. Possible calculations of stakeholder satisfaction include overall satisfaction surveys, or message recollection for outreach programs. The District currently does not measure stakeholder satisfaction. 3. Internal Benefits from Stakeholder Input This measure addresses the value District employees believe stakeholder engagement has provided to the District s projects and activities. Measurement by the District could focus on surveying District employees running projects that have stakeholder involvement. The District currently does not measure the internal benefits of stakeholder input. 4. Comparative Rate Rank This measure depicts how the District s sewer service charge compares to similar service providers in the region (i.e., local area wastewater providers with treatment and collection systems). Comparative Rate Rank: This measure takes the District s sewer service charge (SSC) and divides it by the average SSC for comparable wastewater providers in the region. A number over 100% means the District s rate is higher than the area average, while less than 100% means the District s rate is lower than the area average. 120% Comparative Rate Rank for SSC District rate as % of average rate 100% 80% 60% FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 57 Page 215

216 $1,000 Rate Comparison $800 $600 Average $400 $200 $0 Analysis: The three years of 15% increases from FY 07 to FY09 saw the District return to match the regional average SSC. Since then, other agencies have increased their SSCs at rates greater than CPI, resulting in NSD s rate being lower than the regional average. While a lower than average rate is beneficial to rate payers, it may also be an indication that the rate is not keeping up with operational costs, maintenance demands and the necessary capital improvements of the District. The rapid drop from 100% to 74% of the average in four fiscal years resulted in the watch rating. 5. Media/Press Coverage This measure captures media portrayal of the District in terms of awareness, accuracy and tone. Amount of Coverage: This is the total number of Napa Valley Register articles concerning the District, per year na na Newspaper Articles # per year Analysis: The spikes in 2006 and 2011 were due to hearings regarding sewer service charge increases that are required under California Proposition 218, which are required at least every 5 years. The increase in articles in 2013 was partially due to the Page